Economics of Digital Economy

The modern economy is characterised by a dominant position of several large platforms and the importance of consumer data. Online platforms quickly overtook traditional businesses in the list of the world’s largest companies. They run their business in ways that are fundamentally different from traditional markets: services are often offered for free, platforms share their marketplace with rivals’ products, and the ability of platforms to attain high profits relies on access to consumer information.

In this course we are going to unpack the key driving factors behind the ascent of the digital economy as well as policy challenges brought by this rapid rise. We are going to talk about how firms can build up and monetise network effects, and how platforms make their pricing and stocking decisions. We will look into the economics of search engines, strategic design of search algorithms and search pricing. We are going to discuss the competition policy response to the rise of digital platforms and, in particular, focus on consumer data and privacy.

https://www.wolfram.com/mathematica/trial/

Participants should sign up for a 15 day free trial of Mathematica prior to the first practical session. 

READING SUGGESTION 

The Economics of Platforms: Concepts and Strategy (Belleflamme and Peitz, CUP, 2021)