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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. Sergey Yevgenievich Barykin & Irina Vasilievna Kapustina & Tatiana Viktorovna Kirillova & Vladimir Konstantinovich Yadykin & Yevgenii Aleksandrovich Konnikov, 2020. "Economics of Digital Ecosystems," Journal of Open Innovation: Technology, Market, and Complexity, MDPI, Open Access Journal, vol. 6(4), pages 1-16, October.
    4. Belloc, Filippo, 2019. "Effort under alternative pay contracts in the ride-sharing industry," MPRA Paper 95179, University Library of Munich, Germany.
    5. 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.
    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. 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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