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Vera Demary / Christian Rusche IW-Analyse No. 123 13. September 2018 The Economics of Platforms

Digital platforms already dominate the top 10 of the world’s most valuable firms. The specific characteristics of their business model, such as quick growth and market power soon after market entry, have provoked public discourse.

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The Economics of Platforms
Vera Demary / Christian Rusche IW-Analyse No. 123 13. September 2018

The Economics of Platforms

IW-Analyse

German Economic Institute (IW) German Economic Institute (IW)

Digital platforms already dominate the top 10 of the world’s most valuable firms. The specific characteristics of their business model, such as quick growth and market power soon after market entry, have provoked public discourse.

This paper analyzes digital platforms’ business models, the reasons for their success and the challenges they present. Digital platforms offer an online forum for conducting transactions and therefore are able to dramatically reduce transaction costs, which creates value for platform users. Generally, digital platforms are aware of the high and increasing importance of data. By collecting and combining data from the different user groups, digital platforms are able to improve their service for existing users and to attract new user groups. Digital platforms’ market power and their control over large, valuable sets of data have attracted the attention of regulatory authorities and led to investigations and fines. Economic policy should aim to protect consumers while still fostering the digital platform business model.

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Download PDF
The Economics of Platforms
Vera Demary / Christian Rusche IW-Analyse No. 123 13. September 2018

Vera Demary / Christian Rusche: The Economics of Platforms

IW-Analyse

German Economic Institute (IW) German Economic Institute (IW)

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Artificial Intelligence – Will Boosted Productivity Lead to Better Pay?
Jan Büchel / Roschan Monsef IW-Trends No. 2 10. May 2024

Artificial Intelligence – Will Boosted Productivity Lead to Better Pay?

Artificial intelligence (AI) is already being used in a wide variety of applications both inside and outside the corporate world.

IW

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Marc Scheufen IW-Trends No. 2 10. May 2024

Obstacles to Data Sharing – An Outline of Recent Developments with Policy Recommendations

The increasing networking of production processes and the ability of artificial intelligence to analyse ever larger amounts of data offer enormous potential for the German economy. To exploit this potential fully, however, data must be shared.

IW

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