In economics, a network effect is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Network effects are typically positive feedback systems, resulting in users deriving more and more value from a product as more users join the same network. The adoption of a product by an additional user can be broken into two effects: an increase in the value to all other users and also the enhancement of other non-users' motivation for using the product.
In economics, industrial organization is a field that builds on the theory of the firm by examining the structure of firms and markets. Industrial organization adds real-world complications to the perfectly competitive model, complications such as transaction costs, limited information, and barriers to entry of new firms that may be associated with imperfect competition. It analyzes determinants of firm and market organization and behavior on a continuum between competition and monopoly, including from government actions.
Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss. Competition can arise between entities such as organisms, individuals, economic and social groups, etc. The rivalry can be over attainment of any exclusive goal, including recognition.
In economics, perfect information is a feature of perfect competition. With perfect information in a market, all consumers and producers have complete and instantaneous knowledge of all market prices, their own utility, and own cost functions.
Richard Lee "Dick" Schmalensee is the Howard W. Johnson Professor of Management, Emeritus at the MIT Sloan School of Management. He is also Professor of Economics, Emeritus, at the Department of Economics at MIT. He served as the John C Head III Dean of the MIT Sloan School of Management from 1998 through 2007. He was a member of the President's Council of Economic Advisers from 1989 through 1991 and served 12 years as Director of the MIT Center for Energy and Environmental Policy Research.
A technology evangelist is a person who builds a critical mass of support for a given technology, and then establishes it as a technical standard in a market that is subject to network effects. The word evangelism is borrowed from the context of religious evangelism due to the similarity of sharing information about a particular concept with the intention of having others adopt that concept. This is typically accomplished by showcasing the potential uses and benefits of a technology to help others understand how they can use it for themselves.
Jean Tirole is a French economist who is currently a professor of economics at Toulouse 1 Capitole University. He focuses on industrial organization, game theory, banking and finance, and psychology. In particular, he focuses on the regulation of economic activity in a way that does not hinder innovation while maintaining fair rules.
The MIT Department of Economics is a department of the Massachusetts Institute of Technology in Cambridge, Massachusetts.
A two-sided market, also called a two-sided network, is an intermediary economic platform having two distinct user groups that provide each other with network benefits. The organization that creates value primarily by enabling direct interactions between two distinct types of affiliated customers is called a multi-sided platform. This concept of two-sided markets has been mainly theorised by the French economists Jean Tirole and Jean-Charles Rochet and Americans Geoffrey G Parker and Marshall Van Alstyne.
Mathias François Dewatripont is a Belgian economist and professor at the Université libre de Bruxelles (ULB) and visiting professor at the Massachusetts Institute of Technology (MIT).
An economic catalyst is an entrepreneur or company that precipitates a fundamental change in business or technology. A more precise definition of a catalyst is based on the new economics of multi-sided platforms. In this literature an "economic catalyst" is an entity that has (a) two or more groups of customers; (b) who need each other in some way; but (c) can't capture the value from their mutual attraction on their own; and (d) rely on the catalyst to facilitate value-reaction reactions between them. For-profit businesses, joint ventures, cooperatives, standard-setting bodies, and governments operate catalysts.
David Sparks Evans is an American economist specializing in antitrust and two-sided markets. He is the chairman of Global Economics, Inc., and founding editor of Competition Policy International. He teaches at the University College London, where he is the co-executive director of the Jevons Institute for Competition Law and Economics, and at the University of Chicago Law School.
Frederic Michael Scherer is an American economist and expert on industrial organization. Since 2006, he continues as a professor of economics at the JFK School of Government at Harvard University.
Competitive heterogeneity is a concept from strategic management that examines why industries do not converge on one best way of doing things. In the view of strategic management scholars, the microeconomics of production and competition combine to predict that industries will be composed of identical firms offering identical products at identical prices. Deeper analyses of this topic were taken up in industrial organization economics by crossover economics/strategic-management scholars such as Harold Demsetz and Michael Porter. Demsetz argued that better-managed firms would make better products than their competitors. Such firms would translate better products or lower prices into higher levels of demand, which would lead to revenue growth. These firms would then be larger than the more poorly managed competitors.
Platform evangelism is the application of technology evangelism to a multi-sided platform. It seeks to accelerate the growth of a platform's commercial ecosystem of complementary goods, created by independent developers, as a means to the end of maximizing the platform's market share. This initiative focuses on providing developers the resources to innovate, participate, and provide feedback to grow the platform.
David B. Yoffie is the Max and Doris Starr Professor of International Business Administration at Harvard Business School (HBS).
Toulouse School of Economics is a school of economics, affiliated with Toulouse 1 Capitole University, a constituent college of the Federal University of Toulouse Midi-Pyrénées. It is located in the city of Toulouse, France.
A Markov perfect equilibrium is an equilibrium concept in game theory. It has been used in analyses of industrial organization, macroeconomics, and political economy. It is a refinement of the concept of subgame perfect equilibrium to extensive form games for which a pay-off relevant state space can be identified. The term appeared in publications starting about 1988 in the work of economists Jean Tirole and Eric Maskin.
The platform economy is economic and social activity facilitated by platforms, typically online sales or technology frameworks. Platform businesses control an increasing share of the world's economy and sometimes disrupt traditional businesses.
The Platform Canvas is a conceptual framework dedicated to explain the mechanisms of multi-sided platform organizations, and how value is created, captured and delivered in the platform economy. Multi-sided platforms, also called two-sided markets, like Amazon, Uber and Airbnb, create value primarily by enabling direct interactions between distinct groups of affiliated customers. The framework serves as a strategic management tool to assist academics, entrepreneurs and managers identify the essential elements in platform businesses, understand the interrelations of these element and recognize the dynamics of associated network effects. The 12 components of the canvas highlight the internal and external factors of the business model, and the orchestration of the affiliated ecosystems.
