The economics of digital platforms, including the sharing economy, has become a hot topic – not only among researchers but also with several new books for the non-specialist reader. Yesterday I took part in the Digital Forum organised by the Toulouse School of Economics – home of Nobel Laureate Jean Tirole, one of the first economists to analyse platforms (or two-sided or multi-sided markets). It was a packed event with some fascinating contributions. And on the train to and from Paris, I read Matchmakers by David Evans and Richard Schmalensee. This follows on from Platform Revolution by Geoffrey Parker, Marshall Van Alstyne and Sangeet Paul Choudary (which I reviewed here), and The Sharing Economy by Arun Sundararajan (here).
The Matchmakers: The New Economics of Multisided Platforms Platform Revolution: How Networked Markets are Transforming the Economy–and How to Make Them Work for You
The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism
All three are well worth reading – they all clearly explain the economic characteristics of digital platforms, with lots of examples. Inevitably there is some overlap but in fact the books complement each other nicely and also include different examples. Platform Revolution takes more of a business design perspective, while The Sharing Economy is specifically focused on peer-to-peer markets. Matchmakers has more about the economic analysis and public policy questions including competition – David Evans’ earlier book, a collection of papers, Platform Economics, was quite heavily focussed on the competition issues.
Some of the examples in Matchmakers are very nice. I particularly liked the case of the US trucking industry. There’s also a chapter on M-Pesa, which I know a bit about; it is a nice description of how it worked in Kenya, although I’d have been interested to read about why mobile money platforms have failed in so may unbanked countries – regulatory barriers in my view. One of the questions about platforms’ success or failure is the extent to which they take advantage of opportunities for regulatory arbitrage on the one hand and can be killed by hostile regulation on the other hand.
Marshall Van Alstyne was one of the participants in the Toulouse School of Economics event and gave a great talk including this chart; he and I agreed that there is a huge research agenda on this subject as we’re entering the era of platforms. I have an issues paper out soonish, sketching some of the questions.