This course explores the economic principles underlying digital markets, including platforms, network effects, data economics, pricing strategies, competition policy, and regulation. The focus will be on understanding the unique characteristics of digital goods and services, strategic firm behavior in digital markets, and the role of public policy in shaping market outcomes. To understand how firms gain competitive advantages and their consequences for competition, special attention is paid to the development of innovative platforms, products and services in different contexts (i.e., ‘ecosystems’). We will look at the strategies of different types of firms – incumbents and new entrants, network companies, platform developers, application providers. We will study how firms employ new technologies for the emergence of new and profitable opportunities to create value added contents for the final customers.
Course Prerequisites
Basic knowledge of microeconomics, indUstrial organization and game theory.
Teaching Methods
Lectures
Assessment Methods
Written exam.
Texts
Reading material for this course is separated in two categories:
a) Required readings, i.e., max two items per lecture. b) Suggested readings, i.e., additional material that is likely to be referred to during the lectures.
The textbook is:
Rohlfs, J.H. (2001) “Bandwagon effects in high-technology industries”, The MIT Press, Cambridge, Massachussets .
Contents
Topics will include: 1. Platforms and ‘network effects’ 2. Platform competition through ‘standard setting’ 3. Competition ‘between’ and ‘within’ platforms 4. Platforms as ‘two-sided markets’ and pricing strategies 5. Market power in digital markets 6. Competition policy in digital markets 7. Regulation of digital platforms
Learning objectives By the end of the course, students will: • Understand the economic characteristics of digital goods and platforms. • Analyze the role of network effects and data in shaping market power. • Explore pricing strategies and business models of digital platforms. • Examine competition policy and regulatory challenges in digital markets.
At the end of the course students will have learned to:
Identify the characteristics of platforms and the emergence of new business models Understand the economics of platforms in terms of pricing and product/service offerings Recognize the implications of digital markets for businesses and customers Apply the methodologies and relevant theoretical approaches to discuss the strategies of existing and new firms Analyse the main regulatory implications of the emerging modes of competition
