Platform Economy
The goal of the Digital Business Institute is to become the premier research and education center on platform strategy. Through rigorous research, corporate partnerships, conferences and executive education, we seek to become a nexus where academic research meets the practice of managing platform businesses, such that both inform and build upon each other.
Our goal is to study the most pressing challenges facing platform businesses and to provide tangible recommendations on platform strategy and policy to entrepreneurs, executives and policymakers. To achieve this goal, we work closely with companies on sponsored research projects, which will build upon and feed into our academic research.
Current topics of interest include:
- Effective strategies for platform launch and growth
- Platform design and governance rules to create and maintain trust
- Strategies for complementors to effectively engage with the platforms they engage in
- Strategies to turn regular products and services into platforms
- Regulatory concerns raised by powerful platforms
Please email us at digbus@bu.edu for more information on sponsored research partnerships.
Platform Strategy Research Faculty
Research Articles
Data-Enabled Learning, Network Effects and Competitive Advantage
Andrei Hagiu and Julian Wright, June 2020
We model competition between firms which improve their products through learning from customer data. We explore the implications for competitive dynamics of three new features of such learning compared to traditional learning-by-doing: (i) learning increases willingness-to-pay rather than reducing marginal cost, (ii) firms can improve their products for each customer based on their individual usage experience, (iii) products can improve while customers are still consuming them.
Should Amazon be allowed to sell on its marketplace?
Andrei Hagiu, Tat-How Teh and Julian Wright, May 2020
A growing number of intermediaries (e.g. Amazon, Apple’s Appstore, and Walmart) act as resellers on their own marketplaces. We build a model of dual marketplace and reseller intermediation to explore the implications of this practice, and the call to ban it, taking into account an intermediary’s optimal choice of mode. Our analysis shows that an outright ban tends to benefit third-party sellers at the expense of consumer surplus or welfare, even after allowing for innovation by third-party sellers. Rather than an outright ban, we show that policies that limit the imitation of highly innovative third-party products and prevent steering of buyers to the intermediary’s own products would lead to preferable outcomes.
A Proposal: A Market for Truth to Address False Ads on Social Media
Marshall Van Alstyne, April 2020
This short article proposes a “market for truth” that would allow social media platforms to take political ads, guarantee the ads are lie free, and at the same time absolve such platforms of responsibility for deciding what’s true. Using mechanism design, it causes advertisers to either internalize their negative externalities or to signal that they are untrustworthy. It also provides a business model that should make fact-checking scalable and profitable.
When Data Creates Competitive Advantage
Andrei Hagiu and Julian Wright, Jan 2020
Many executives and investors assume that it’s possible to use customer-data capabilities to gain an unbeatable competitive edge. Or so the thinking goes. More often than not, this assumption is wrong. In most instances people grossly overestimate the advantage that data confers.
Managing Multi-Sided Platforms
Asda Chintakananda, David McIntyre, Arati Srinivasan, Allan N Afuah, Kevin Boudreau, Tobias Kretschmer, Aija Elina Leiponen and Marshall Van Alstyne, August 2019
Multi-sided platforms (MSPs) have revolutionized competitive dynamics across a wide array of markets. Despite significant advances in MSP strategy research, many challenges and ambiguities about the emergence and effective management of platforms remain. This symposium brings together a panel of leading scholars at the intersection of economics, strategy, and technology management to (1) highlight recent advances in platform research, emphasizing both strengths and limitations, and (2) outline critical next steps for the burgeoning body of research on the management of multi-sided platforms.
Platforms and Blockchain will Transform Logistics
Sangeet Paul Choudary , Marshall W. Van Alstyne and Geoffrey G. Parker, June 2019
Major change is coming to the logistics and shipping industries – a transformation that promises to be even more dramatic than the move to third-party logistics a generation ago. With increasing digitization, platform-based business models will connect new players, wash away inefficient old ones, and harness the cloud.
Controlling Versus Enabling
Andrei Hagiu and Julian Wright, Management Science, September 2017
How does a firm decide whether to employ professionals and control how they deliver services to clients, or to operate as a platform enabling independent professionals to provide services directly to clients?
Finding the Platform in Your Product
Andrei Hagiu and Elizabeth J. Altman, Harvard Business Review, July-August 2017
Lays out four strategies for turning regular products or services into platforms, and a guideline for when this transformation makes sense.
Network Effects Aren’t Enough
Andrei Hagiu and Simon Rothman, Harvard Business Review, April 2016
Explains how marketplace startups can deal with four key issues: growth, trust and safety, disintermediation, and regulation.