This PSE summer school introduces participants to cutting-edge research on “platforms”, a form of intermediation that has gained importance in recent years. In a two-sided market, two groups interact through an intermediary, or platform, that accounts for the externalities between the groups. Two-sided platforms, or networks, can be found in many industries, including search engines or communication networks such as the media and the internet. The program will focus on these cases, and will familiarize participants with the relevant methods that are required to analyze several important issues that are currently discussed in the economic literature, including policy.
- Platforms : Business models and information - Nikhil Vellodi
- Platforms and Data - Nikhil Vellodi
- Search : Platform design - Régis Renault
- Platform antitrust : Empirical tests - Philippe Gagnepain
Platforms : Business models and information – Nikhil Vellodi
This course will start from the classical theory of two-sided platforms, and enrich the model to take into account current business models of digital platforms : targeted advertising, information and new product diffusion. The course will also explore how platforms can be used to relay information and rumors (including fake news) and extract information about friends in social media. The course will be based on theoretical and empirical work, with references drawn from economics, marketing and computer science.
Platforms and Data – Nikhil Vellodi
Online platforms have become an indispensable part of global economic activity. Due to their rapid emergence, their existence poses a number of issues for regulators and policy makers. This course will address such platforms’ primary asset – data. It will comprise of two sections, relating to data production and data protection. The first will tackle topics such as : social learning, consumer reviews (real and fake), ratings and incentives. The second will explore issues including : consumer privacy (discrimination versus targeting, data externalities and ownership) and producer privacy (imitation and competition). The course will feature both theory and empirics, and will center largely around issues of current importance in the regulatory and policy spaces.
Search : Platform design – Régis Renault
The course presents the basic concepts underpinning the theory of imperfectly competitive markets with consumer search and draws some implications for the design of online platforms. The theory of consumer search can address critical questions such as the impact of reduced search cost on prices, product variety, and product design as well as advertising practices. Particular attention is devoted to the allocation of prominence of sellers in the search order and the role of information obfuscation in maintaining market power on a platform that should nonetheless remain attractive to consumers.
Platform antitrust : Empirical tests – Philippe Gagnepain
Platform economics creates some important challenges for antitrust policy. This course proposes to discuss several antitrust issues from an empirical perspective. Examples include : (i) Platform providers who compete with one another to get the firms that produce of complementary goods and services onboard their network, and often rely on exclusive contracts or vertical integration in order to do so. (ii) Apple who uses most favored-nation (MFN) clauses which prohibits publishers from selling their e-books at higher retail prices on Apple’s iBookstore than they sold for elsewhere. (iii) The newspaper market which provides an ideal environment for analyzing the effect of mergers on product features. After an ownership consolidation, newspaper publishers improve or diminish the content quality, and may enlarge or shrink content variety.
Contents – Industrial organization