The Dynamics of Platform Business Value Creation

Abstract

This paper argues that the technology and economic determinants of value creation in platform businesses need to be better incorporated in the analysis of the conduct of digital platforms. Platforms operate in an environment of extreme interconnectivity, exhibit many externalities and economies of scope and require sophisticated coordination solutions. This paper describes how the innovation management literature, together with elements of evolutionary theory, complexity, contract theory, and incentive mechanism design, provide the elements of a useful framework to analyze the evolution and behavior of digital platforms.

Keywords: Technology, Digital Platforms, Antitrust, Competition, Business Models, Innovation

JEL Classification: K21, L2, L4, L5, M21