A Primer on Digital Markets and Platforms

Course offered by:	Prof. Dr. Tobias Kretschmer
Offering University:	Uni München (LMU)
Course Language:	English
Subject Area:	Economic Sciences	Free of Charge
Average Workload:	15 hours	Free of Charge	Enrol
Picture Credits: miftakhudin (on Noun Project), edited by Ambre Nicolle

What awaits you in this course?

In the modern digital economy, platforms like Booking.com, Amazon, iOS, and Tinder are ubiquitous, reshaping industries from social media to e-commerce and beyond. These platforms facilitate complex interactions across various business environments and are driven by network effects, technological advances, and user dynamics. They also introduce innovative business models and pricing strategies, fundamentally changing competitive dynamics and relationships between firms and consumers. This course provides a focused exploration of these critical issues, combining theoretical knowledge with practical insights to equip students with the skills needed to navigate and impact the evolving landscape of digital markets.

Competencies to be acquired

After completing the course, students will have acquired a set of competencies to analyze and manage digital markets and platforms effectively. Specifically, students will have developed the following skills:

Analytical Skills: The ability to analyze digital markets from the perspective of incumbent firms, digital entrants, and policymakers, understanding the unique challenges and opportunities each faces.
Strategic Thinking: The ability to evaluate strategies in digital markets and platforms from the perspective of platform owners and complementors, assessing their impact on competition and market dynamics.
Academic Proficiency: The ability to understand and critically evaluate current state-of-the-art academic literature on digitization and platforms, staying informed of the latest research and developments in the field.

These competencies will enable students to navigate and influence the rapidly evolving landscape of digital markets and platform business models.

Course structure

The course is divided into three major blocks that lay the foundation for understanding digital markets and platforms: “Foundational”, “Platform and Ecosystems Dynamics” and “Digital markets”. Adopting a 'Mix and Match' approach, the course is structured around self-contained videos that allow students unparalleled flexibility in how they engage with the material. This format supports personalized learning journeys, enabling students to navigate through the content at their own pace and according to their individual learning needs. Each module is designed to be comprehensive on its own while also fitting seamlessly into the broader curriculum for those who follow the suggested sequence.

Students enrolled in this course will have access to a comprehensive suite of learning materials designed to support both the theoretical and practical understanding of digital markets and platforms:

Short Instructional Videos: A series of concise videos, each ranging from 6-10 minutes, provide focused discussions on key topics. These videos are supplemented with references to academic papers and studies that are detailed in an accompanying reading list for deeper exploration.
Lecture Slides: All presentations used in the videos are available for download in PDF format, allowing students to review content at their own pace and use them as a study aid.
Interactive Quizzes: To reinforce learning and facilitate self-assessment, the course includes a series of interactive quizzes. These are designed to test knowledge incrementally and ensure mastery of course content through immediate feedback.

What can you learn in this course?

Learning goals: This course offers an introductory overview of the economic principles driving the significant 'megatrend' of digitization and the rise of platform business models. By the end of this course, students will understand the key phenomena of digital platforms and markets. They will examine how these platforms are transforming traditional industries and altering economic landscapes.

Students will engage with the concept of digital markets and platforms across different levels:

At the market level: Students will gain insights into the shift from conventional to digital firms, exploring the broader economic impacts of digitization.
At the platform level: The course will cover the roles and dynamics within platform ecosystems, focusing on the interactions between the platform, consumers, and complementors.
At the firm level: There will be discussions on the strategies digital firms employ and the implications of these strategies for competitive positioning and market dynamics.
At the individual level: The course will also touch on user behavior and preferences in digital spaces, exploring how digital platforms shape consumer decisions and experiences.

This approach provides students with a foundational lens through which to view the complexities of digital markets and platform models, preparing them to understand and engage with these evolving sectors.

Outline

A. Foundational

A1. Network Goods and Network Effects
A2. Characteristics of Two-Sided Markets
A3. Pricing Strategies in Two-Sided Markets
A4. From a World of Scarcity to a World of Abundance
A5. Non-Pricing Strategies in Two-Sided Markets
A6. Experience Goods: Reputation and Feedback Systems

B. Platforms & Ecosystems Dynamics

B1. Complementors: Heterogeneity and Strategies
B2. Adoption and Diffusion
B3. Compatibility: Strategies and Impacts
B4. Platform Orchestration Activities
B5. Competition in Platform Ecosystems

C. Digital markets

C1. How (Big) Data Affects Firms and Consumers
C2. Pricing in the Digital World
C3. Competition Policy
C4. Artificial Intelligence and The Economy
C5. Consumers and Social Issues

Course offered by

Tobias Kretschmer is a Professor of Strategy, Technology and Organization (ISTO) at LMU Munich School of Management. He holds a PhD in Economics from London Business School and an MSc in Strategy from the University of St. Gallen. Prior to joining LMU Munich, he held full-time positions at London School of Economics and INSEAD. He is a Research Fellow at the Centre for Economic Policy Research in London and a Research Professor at ifo Institute in Munich. His work focuses on strategy and organization design in technology-intensive industries, especially platform markets and information and communication technologies. His work appeared in American Economic Review, Management Science, Information Systems Research, Strategic Management Journal, and Organization Science. He is an associate editor at Strategic Management Journal and the International Journal of Industrial Organization.

Further authors

Ambre Nicolle is an Assistant Professor at the Institute for Strategy, Technology, and Organization at the University of Munich (LMU). Her research explores the dynamics of demand and supply in network and cultural industries, with a particular focus on digital platforms and market competition. Using structural modeling and large observational datasets, she examines how these platforms shape consumer behavior, market outcomes, and competitive dynamics. Her research has been published in peer-reviewed academic journals and has garnered support from several grants, including a Marie Skłodowska-Curie fellowship. Ambre Nicolle holds a Ph.D. in Economics from the University of Montpellier, France.

Denzel Glandel Tafur is a Research and Teaching Assistant at the Institute for Strategy, Technology and Organization at LMU Munich, starting in October 2023. He holds an M.Sc. in Economics from LMU Munich and the Pontifical Catholic University of Peru. His research focuses on organizational design, platform markets, and innovation management. Previously, he worked at the Max Planck Institute for Innovation and Competition and has extensive consulting experience in Lima. Currently, he is pursuing a PhD at LMU Munich.

Further contributions to the course:

Safia Bouacha (formerly Research and Teaching Assistant at ISTO, LMU Munich) acted as a project manager and instructional designer for the course from January 2022 to August 2024.
Dr. Joy Wu (formerly Postdoctoral Researcher at ISTO, LMU Munich, and currently Assistant Professor of Management Information Systems at the University of British Columbia, Sauder School of Business) contributed to the content creation of the course from January 2022 to December 2023.
Yannick Keuker, Niclas Kolbe, and Felix Beierwaltes supported the team as student assistants.

Target group

Digital platforms and markets are reshaping modern society and business landscapes. This MOOC welcomes a diverse audience, from professionals in digital industries seeking to update their knowledge to students across fields such as economics, business, and computer science desiring a foundational understanding of digital market dynamics. It also serves those curious about the digital economy’s global impact. The course merges theoretical concepts with practical applications, making it suitable for anyone aspiring to navigate or lead in the digitally-driven business environment.

Confirmation of participation

If you pass at least 80 percent of all the quizzes included in the course, you can download a certificate of participation.

License

Keywords

digital markets, platforms, two-sided markets, big data, e-commerce, marketplaces, economics of platforms, adoption and diffusion of technologies, network effects, pricing, profit, revenue, firms strategies, reputation systems, feedback systems, platform governance, competition, platform ecosystems, artifical intelligence