Duration
22h Th
Number of credits
| Bachelor in business engineering | 4 crédits |
Lecturer
Language(s) of instruction
English language
Organisation and examination
Teaching in the first semester, review in January
Schedule
Units courses prerequisite and corequisite
Prerequisite or corequisite units are presented within each program
Learning unit contents
Today, the five largest companies in the world by market capitalization are Google (Alphabet), Apple, Facebook, Amazon, and Microsoft, often referred to by the acronym GAFAM. They are closely followed by another group of emerging companies, known as NATU (for Netflix, Airbnb, Tesla and Uber) and are increasingly challenged by Chinese giants such as Alibaba, Baidu, or Tencent. What all these companies (perhaps with the exception of Tesla) have in common is that they can be defined as platforms, i.e., as undertakings whose core mission is to enable interactions between users so as to generate value from these interactions. These new digital matchmakers have been turbocharged by technologies and data creating new industries, destroying old ones and forcing traditional business to reinvent themselves.
The economics of multi-sided platform formalizes the interaction between different groups of users on the platform. Economists, for instance the recent Nobel prize Jean Tirole, have shown that taking this interaction between the different sides into account changes many of the traditional results of the classical economic textbook. For instance, prices below marginal cost could be optimal (sometimes optimal prices are negative) or demand could increase with price contradicting the law of demand. Economists and students should take this interaction into account if they want to understand how firms operate in the digital economy and how they are competing for technologies, for products, for clients and for audience. This proposed course intends to fill this gap by presenting the main insights from the last 20 years of research in economics.
Course content
1 Introduction: Netflixeconomics
2 Network goods
A good is called a network good when its value for consumers increases with the number of users. In this first part, we define the concept of network good, the demand for such a good (which is very particular) and the associated concept of critical mass of users. We will then see how firms compete for network goods.
3. Platforms
Platforms are digital intermediate that connect groups of users. Google is an example, it connects internet users with advertisers. In this part, we will define the concept of platform (also called two-sided market), see how platforms fix their price and how they compete.
4. Data and pricing
In this part, we will see how digital firms use consumers data for personallize prices and the consequences for consumers.
5. Regulating the internet
Di erent types of regulations apply to the digital economy. In this part, we will study some of them: net neutrality, the protection of the competitive process by competition authorities with a focus on some recent high profile cases and the recent (2020) digital market act.
6. Digital goods
The digitalization of the economy changes the way goods are produced, distributed and consumed. This is particularly the case for the cultural industries (music, movies, television shows, novels). In this last part, we will see how cultural industries have been transformed by the digitalization and the consequences on consumers, producers and product quality. A part of the chapter will focus on piracy.
The course will be a mix of theory, empirical evidences and case studies.
Learning outcomes of the learning unit
Learning objectives:
Discover and understand the theoretical concepts and the economic corpus related to the development of Internet companies, also called the economy of multi-sided platforms.
Understand how businesses work in the digital economy and how firms compete for technologies, products, customers and audiences.
Apply the concepts learned through the resolution of exercises to appropriate the economic models used for this digital environment.
Study skills:
Develop your reflective capacity and autonomy in approaching the economy of multi-sided platforms.
Adopt a scientific approach by using the calculations necessary for the good management of Internet companies.
Assimilate the technical vocabulary related to the topic of the Economics of Internet course.
Linguistic transversal competence linked to the course given in English: oral and written communication in a foreign language.
Prerequisite knowledge and skills
Microeconomics (B2)
Planned learning activities and teaching methods
Teacher's presentations, discussions and exchanges, readings
For the exercises, there will be video tutorial realized by a student.
Mode of delivery (face to face, distance learning, hybrid learning)
Face-to-face course
Additional information:
Recommended or required readings
Available on Lola
Exam(s) in session
Any session
- In-person
written exam ( open-ended questions )
Additional information:
The final exam is a writen exam.
The final grade for SEG students for the course Digital Transformation will be the average of the two partim (Economics of Internet and Digital Strategy).
The final grade for INGE students is the result of the exam.
Work placement(s)
Organisational remarks and main changes to the course
Contacts
Axel Gautier
Office I.43 (B31)
Email: agautier@uliege.be