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The economics of markets and platforms

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  • Daniel F. Spulber

Abstract

Advances in the study of both markets and platforms contribute to economics. Platforms are typically digital markets, although platforms can designate markets generally. So, the economics of markets and the economics of platforms are one and the same. Platforms show the critical role of intermediaries in endogenous price adjustment and market clearing. The platform model remedies problems with general equilibrium analysis by combining and extending the basic Walrasian and Marshalian market models. The analysis of platforms provides explanations for the bid–ask spread, including market power, search costs, matching costs, adverse selection, and moral hazard. The study of platforms demonstrates the importance of participation and coordination in the formation of markets. The discussion emphasizes that platforms have significant implications for the theory of the firm. The analysis further considers how platforms affect innovation and entrepreneurship.

Suggested Citation

  • Daniel F. Spulber, 2019. "The economics of markets and platforms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 159-172, January.
    • Handle: RePEc:bla:jemstr:v:28:y:2019:i:1:p:159-172
    DOI: 10.1111/jems.12290
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    References listed on IDEAS

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    1. R. Andrew Butters & Daniel F. Spulber, 2020. "The Extent Of The Market And Integration Through Factor Markets: Evidence From Wholesale Electricity," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1076-1108, July.
    2. Filippo Belloc, 2019. "Why Isn't Uber Worker-Managed? A Model of Digital Platform Cooperatives," CESifo Working Paper Series 7708, CESifo.
    3. Amedeo Piolatto & Florian Schuett, 2022. "Information vs Competition: How Platform Design Affects Profits and Surplus," Working Papers 1325, Barcelona School of Economics.
    4. Heidrun Hoppe-Wewetzer & Christian Siemering, 2022. "Advertisement-financed credit ratings," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 46(1), pages 188-206, January.
    5. Belloc, Filippo, 2019. "Effort under alternative pay contracts in the ride-sharing industry," MPRA Paper 95179, University Library of Munich, Germany.
    6. Michael R. Baye & David E. M. Sappington, 2020. "Revealing transactions data to third parties: Implications of privacy regimes for welfare in online markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 260-275, April.
    7. Belezas, Fernando & Daniel, Ana Dias, 2023. "Innovation in the sharing economy: A systematic literature review and research framework," Technovation, Elsevier, vol. 122(C).
    8. Vyacheslav Makedon & Nataliya Krasnikova & Oleksandr Krupskyi & Yuliia Stasiuk, 2022. "Arrangement of Digital Leadership Strategy by Corporate Structures: A Review," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 8, pages 19-40.
    9. Harold Paredes-Frigolett & Andreas Pyka, 2022. "The global stakeholder capitalism model of digital platforms and its implications for strategy and innovation from a Schumpeterian perspective," Journal of Evolutionary Economics, Springer, vol. 32(2), pages 463-500, April.
    10. Bauer, Johannes M. & Bohlin, Erik, 2022. "Regulation and innovation in 5G markets," Telecommunications Policy, Elsevier, vol. 46(4).
    11. Bejjani, Melissa & Göcke, Lutz & Menter, Matthias, 2023. "Digital entrepreneurial ecosystems: A systematic literature review," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    12. Piolatto, A. & Schuett, Florian, 2022. "Information vs Competition : How Platform Design Affects Profits and Surplus," Discussion Paper 2022-002, Tilburg University, Tilburg Law and Economic Center.
    13. Christopher Helm & Tim A. Herberger & Marcel Tyrell, 2021. "Demand dynamics across secondary German Book markets: an information aggregation and synthetization approach," Information Systems and e-Business Management, Springer, vol. 19(2), pages 567-596, June.
    14. Bauer, Johannes M. & Prado, Tiago S., 2020. "Lessons from Innovation Economics for Digital Platform Policy," ITS Conference, Online Event 2020 224846, International Telecommunications Society (ITS).

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