Course overview

Artificial Intelligence (AI) is indicated as the factor that will likely originate a new industrial revolution. It will certainly affect many sectors of our economies, probably sooner than expected, and with important trade-offs. This short course aims addressing some of the forces and consequences that AI is and will bring, in particular, to industrial organization and market interactions. How markets and competition will be affected by AI? What implications for consumers privacy? What will be the impact of AI powered recommendation systems? Will AI reduce biases and discrimination or rather increase them? We will focus on some of the topics that will pose imminent and relevant challenges in this rapidly evolving area, for economic research and policy makers.  

About the instructor

Giacomo Calzolari (Ph.D. University of Toulouse, 2001) joined the Institute in September 2018 from the University of Bologna. He is Research Fellow at the Centre for Economic Policy Research (CEPR). He has published in top international journals such as American Economic Review, Rand Journal of Economics, International Economic Review, Games and Economic Behavior, Journal of Financial Intermediation, Review of Financial Studies, and Journal of Economic Theory. He has been conferred the Young Economist Award of the European Economic Association and the 2014-Best paper award by the Association of Competition Economics. He is co-editor of the International Journal of Industrial Organization, European Economy – Banks, regulation, and the real sector, and Labour: Review of labour economics and industrial relations. He is member of the steering committee of the European Association of Industrial Economics, the Association of Competition Economics and the Economic Advisory Group on Competition Policy of the European Commission. His current research interests include competition policy, economics of regulation, industrial organization, banking regulation and supervision and the economics of incentives.

Course Overview

The success and behavior of digital platforms frequently make it into the news. Competition authorities are dealing with important merger and abuse cases; some economists and lawyers advocate an overhaul of competition law. Platforms have also become an important topic in the economics and management literature. This course introduces the participants to the economic mechanisms at work when digital platform cater to multiple sides that are connected through network effects.

The objective of this course is to give participants a clear understanding of the economic forces at play in the platform economy. For this purpose price and non-price strategies of platforms are studied in detail guiding the participants in particular through the theoretical literature in economics.

Course Outline

• Platforms and network effects
• The use of data: Rating and recommender systems
• Platform pricing: the single platform case
• Platform competition
• Platform governance

References

• Belleflamme, P. and M. Peitz (2018). Inside the engine room of digital platforms: Reviews, ratings and recommendations. In: J. J. Ganuza and G. Llobet (eds.), Economic analysis of the digital revolution, Funcas Social and Economic Studies nº 4, Funcas.
• Belleflamme, P. and M. Peitz (2018). Platforms and network effects. In: L. Corchon and M. Marini (eds.), Handbook of Game Theory and Industrial Organization, vol. II, Edward Elgar, 286-317.

About the Instructor

Martin Peitz is Professor of Economics at the University of Mannheim. He is also a Director of the Mannheim Centre for Competition and Innovation. His policy research focuses on digital markets, regulation, and competition economics. Martinholds a PhD in Economics from the University of Bonn.