Descriptif

(This course is taught by Marc Bourreau)

Course description

The objective of this course is to analyze the economics of digital markets. The class will study the main economic characteristics of digital markets, analyze firms' strategies in these markets, discuss potential market failures and whether and how public authorities should intervene. It will cover relevant theoretical and empirical material in industrial organization and management science and discuss timely case studies in class. Students will learn economic concepts useful to understand and analyze the digital economy. The course will begin with a description of the role of network effects in digital markets and analyze the economics of multi-sided platforms. Then, it will consider the network infrastructures of the Internet and the economic trade-offs at play with net neutrality. Next, the class will review pricing strategies in digital markets, in particular when large stocks of consumer data are available to the firms and discuss how digitization affects consumer information through recommender systems. Finally, it will consider intellectual property in the digital economy and the impact of digitization on innovation.

Course outline

1. Networks

·         Markets with network effects

·         Competition in markets with network effects

·         Public policy in network industries

2. Platforms

·         Definition of multi-sided platforms

·         Platform strategies

·         Platform competition

·         The choice of business model: reseller vs. multi-sided platform

·         Regulation and competition policy in platform markets

3. Internet infrastructures and net neutrality

·         Internet infrastructures

·         Compatibility choices and Internet connectivity

·         Economics of net neutrality

5. Online advertising and search engines

·         Facts and definition about advertising

·         The online advertising ecosystem

·         Targeted advertising

·         Googlenomics

·         Economics of search bias

5. Data and price discrimination

·         Introduction to big data

·         Data and price discrimination

·         Economics of consumer privacy

6. Pricing strategies in digital markets

·         Definition of information goods

·         Pricing information goods

·         Some economics of freemium

7. Online vs. offline markets

·         Prices in offline vs. online markets

·         Key facts about electronic commerce

·         Online and offline channels: substitutes or complements?

8. Long tail and recommendation systems

·         Search goods and experience goods

·         Online reviews and recommender systems

·         The long tail

9. Intellectual property in the digital economy

·         Intellectual property in the ICT sector

·         User-driven innovation: crowdsourcing and crowdfunding