0EM190 INFONOMICS
ACADEMIC YEAR 2020/2021 - QUARTILE 4
LECTURE NOTES AND SUMMARY
SUMMARY
Module 01: Introduction 2
Module 02: Public Values in Digital Platforms 6
Module 03: Economic Analysis of Platforms 12
Economic Analysis of Platforms Case 22
Module 04: Datafication and Artificial Intelligence 26
Module 05: Platforms and Two-sided markets 33
Module 06: Differential Pricing and Surge Pricing 40
Module 07: Zero pricing and Predatory pricing 44
Module 08: Bundling 49
Module 09: Alternative Business Models and Self-regulation 56
Module 10: Openness and Transparency 60
Module 11: Unbundling and Divestiture 68
Meeting 12: Bias in Artificial Intelligence 74
,Module 01: Introduction
Case literature
Fernandez, R., Adriaans, I, Hendrikse, R, & Klinge, T. (2020). The financialization of Big Tech.
Engineering digital monopolies. Stichting Onderzoek Multinationale Ondernemingen.
Key points from the lecture (exam points, you have to be able to explain it)
- Definition of Infonomics
- Differences between public, monopolistic and private value
- Economic analysis of platforms (definition of platform)
- Historical parallels
- Policy challenges due to monopolization of markets and emergence of alternative platforms
1. Why Infonomics and definitions
Why infonomics?
– Platform companies have experienced phenomenal growth over the past 30 years
– They have created business value for stakeholders
– Public value capture has been lagging
– Platform (GAFAM) companies tend to monopolize markets
– Non-profit platforms are emerging as an alternative to established companies
Definition of infonomics
– Definition of infonomics: Theory, study and discipline of examining economic significance to
information and data exchanged at platforms
• Objectives: analyze the importance of information and data as economic assets of platforms to
create value
• Multidisciplinary approach: economics, data sciences and management
• Different approaches towards platforms:
−Platform creates private value: Information and data are considered as a new asset
class (capital), as it has measurable private value
−Platform creates public value: Information and data considered as contribution by users
(labor), and it has some public value
Platforms Private Values vs. Public Values
– Private value: Value creation to private stakeholders
– Public value: Value capture based on fairness, equality and (individual as well as collective) solidarity
,– Monopolistic value: Rents which are appropriate by private companies based on exploiting the benefits
of network externalities and of using algorithms
Disciplinary approaches towards platforms
– Management area
• Marketing: Real-time market analysis, social analytics or mobile marketing analytics
• Supply-chain management: Real-time interaction with suppliers
– Data sciences
• Data analysis: focus on Big Data analytics
• Machine learning: focus on machine learning algorithms
– Economics
• Industrial organization: structure and development of monopolies
• Network economics: demand-side externalities
• Innovation economics: evolutionary process of market development
Private value creation: Example of Digital Marketing
– Real-Time Marketing
– Social Analytics
– Mobile-Marketing Analytics
2. Economic analysis of platforms
Economic analysis of platforms
– Extent to which private value is created
• How is private value created within the platform?
– Extent to which public value is created
• To what extent is sharing of value within outside participants encouraged?
, • To what extent is decentralization of decision-making encouraged?
• To what extent are non-contractual, non-hierarchical and non-monetized forms of interaction
encouraged?
• To what extent are environmentally sustainable forms of interaction encouraged?
Value Creation vs. Value Capture
Challenges for analysis of platforms
• Privately-owned Platforms -> Making them more socially acceptable (creating more public value)
• Public Goods Platforms -> Making them more profitable
Public value capture: Sharing economy
Access Economy (private value)
- Underutilized assets (spare time labor, skills,
goods…)
Platform Economy
- Decentralized Exchanges (two or multi-sided
market)
Community-Based Economy (public value)
- Non-contractual, non-monetized and
non-hierarchical forms of interaction
Historical parallels (Railroad infrastructure vs. Broadband infrastructure)
– The developments we see in Big Tech are very similar to the period called the Gilded Age in the 19 th
century when massive investments in US railroads gave rise to monopolies (Rodrigo Fernandez)
– “During a gold rush, sell shovels“ > With broadband infrastructure platform companies will grow
– Platform development relatively short period of time
• Mid 1990s: Platform development starts
• From 2000s: Monopolization of markets
Platform economy is growing even during pandemic
– The BigTechs got even bigger
Europe lagging in platform development
ACADEMIC YEAR 2020/2021 - QUARTILE 4
LECTURE NOTES AND SUMMARY
SUMMARY
Module 01: Introduction 2
Module 02: Public Values in Digital Platforms 6
Module 03: Economic Analysis of Platforms 12
Economic Analysis of Platforms Case 22
Module 04: Datafication and Artificial Intelligence 26
Module 05: Platforms and Two-sided markets 33
Module 06: Differential Pricing and Surge Pricing 40
Module 07: Zero pricing and Predatory pricing 44
Module 08: Bundling 49
Module 09: Alternative Business Models and Self-regulation 56
Module 10: Openness and Transparency 60
Module 11: Unbundling and Divestiture 68
Meeting 12: Bias in Artificial Intelligence 74
,Module 01: Introduction
Case literature
Fernandez, R., Adriaans, I, Hendrikse, R, & Klinge, T. (2020). The financialization of Big Tech.
Engineering digital monopolies. Stichting Onderzoek Multinationale Ondernemingen.
Key points from the lecture (exam points, you have to be able to explain it)
- Definition of Infonomics
- Differences between public, monopolistic and private value
- Economic analysis of platforms (definition of platform)
- Historical parallels
- Policy challenges due to monopolization of markets and emergence of alternative platforms
1. Why Infonomics and definitions
Why infonomics?
– Platform companies have experienced phenomenal growth over the past 30 years
– They have created business value for stakeholders
– Public value capture has been lagging
– Platform (GAFAM) companies tend to monopolize markets
– Non-profit platforms are emerging as an alternative to established companies
Definition of infonomics
– Definition of infonomics: Theory, study and discipline of examining economic significance to
information and data exchanged at platforms
• Objectives: analyze the importance of information and data as economic assets of platforms to
create value
• Multidisciplinary approach: economics, data sciences and management
• Different approaches towards platforms:
−Platform creates private value: Information and data are considered as a new asset
class (capital), as it has measurable private value
−Platform creates public value: Information and data considered as contribution by users
(labor), and it has some public value
Platforms Private Values vs. Public Values
– Private value: Value creation to private stakeholders
– Public value: Value capture based on fairness, equality and (individual as well as collective) solidarity
,– Monopolistic value: Rents which are appropriate by private companies based on exploiting the benefits
of network externalities and of using algorithms
Disciplinary approaches towards platforms
– Management area
• Marketing: Real-time market analysis, social analytics or mobile marketing analytics
• Supply-chain management: Real-time interaction with suppliers
– Data sciences
• Data analysis: focus on Big Data analytics
• Machine learning: focus on machine learning algorithms
– Economics
• Industrial organization: structure and development of monopolies
• Network economics: demand-side externalities
• Innovation economics: evolutionary process of market development
Private value creation: Example of Digital Marketing
– Real-Time Marketing
– Social Analytics
– Mobile-Marketing Analytics
2. Economic analysis of platforms
Economic analysis of platforms
– Extent to which private value is created
• How is private value created within the platform?
– Extent to which public value is created
• To what extent is sharing of value within outside participants encouraged?
, • To what extent is decentralization of decision-making encouraged?
• To what extent are non-contractual, non-hierarchical and non-monetized forms of interaction
encouraged?
• To what extent are environmentally sustainable forms of interaction encouraged?
Value Creation vs. Value Capture
Challenges for analysis of platforms
• Privately-owned Platforms -> Making them more socially acceptable (creating more public value)
• Public Goods Platforms -> Making them more profitable
Public value capture: Sharing economy
Access Economy (private value)
- Underutilized assets (spare time labor, skills,
goods…)
Platform Economy
- Decentralized Exchanges (two or multi-sided
market)
Community-Based Economy (public value)
- Non-contractual, non-monetized and
non-hierarchical forms of interaction
Historical parallels (Railroad infrastructure vs. Broadband infrastructure)
– The developments we see in Big Tech are very similar to the period called the Gilded Age in the 19 th
century when massive investments in US railroads gave rise to monopolies (Rodrigo Fernandez)
– “During a gold rush, sell shovels“ > With broadband infrastructure platform companies will grow
– Platform development relatively short period of time
• Mid 1990s: Platform development starts
• From 2000s: Monopolization of markets
Platform economy is growing even during pandemic
– The BigTechs got even bigger
Europe lagging in platform development
