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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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Digitalisation of the economy in Germany
Jan Büchel / Dennis Bakalis / Marc Scheufen Expertise 27. December 2023

Digitalisation Index 2023: Digitalisation of the economy in Germany

The digitalisation of the economy in Germany continues to stagnate in 2023: the digitalisation index score is 108.6 points in 2023 compared to 110.5 points in 2022. After the sharp rise in 2021, the development of digitalisation since then can be described as ...

IW

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Christian Rusche / Jeanne Mouton in European Journal of Law and Economics External Publication 15. November 2023

The anti‑steering provision of Article 5 (4) of the DMA: a law and economics assessment on the business model of gatekeepers and business users

Data is a success factor for digital platforms and the core of their business model. The rationale behind this is that data allows for improving the matching process between users which creates value for the platform.

IW

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