Digital Platforms and Economics

Digital platforms such as app stores, search engines, and payment networks operate as intermediaries connecting two or more distinct groups of users, and the economics of these arrangements turns out to be surprisingly different from traditional markets—prices, competition, and innovation all behave in ways that standard single-sided market theory struggles to explain. Because each side of the platform grows more valuable as the other side grows, a small early lead can compound into durable dominance, raising questions about how markets tip, whether multiple platforms can coexist, and what conditions allow a newcomer to displace an incumbent. Researchers are actively working to understand how platforms set prices across sides, govern the ecosystems of developers and complementors that build on top of them, and shape technology standards in ways that can either accelerate or foreclose innovation. A live tension in the field concerns when platform self-preferencing and bundling reflect efficient coordination versus anticompetitive foreclosure—a question with direct implications for ongoing regulatory debates in the United States, Europe, and beyond.

Works

65,306

Total citations

615,668

Keywords

Two-Sided MarketsPlatform CompetitionNetwork EffectsEcosystem InnovationMarket DynamicsTechnology Standards