Economic Platforms: what they are, how they work and why they matter

Abstract: This essay investigates economic platforms, a subject that has received much attention in recent years. Platforms are firms or organizations which connect two parts, usually a seller and a buyer. Users sign up and pay for the service offered by the platform not because the platform itself is valuable but because of the information and connections it provides. Several theories about platform optimality and structure are presented along with a small survey of the importance of economic platforms in the current economy as well as case studies on the different markets in which economic platforms operate.