Since Jean Tirole took the recent Nobel prize for economics, I've been musing over unexplored possibilities for platform concepts. As Vox noted (Yglesias), one of the more important papers for Tirole is in regard to the two sided marketplace of platform competition. Much of today's platforms exist for digital and far flung markets. But what about sparse economic activity in general, at too many local levels? One way to think about platform potential, is in terms of knowledge use systems and time use aggregates. To what degree could multi-use platforms improve - and transform - local government, citizen and marketplace functions?
Done right, platforms could increase production and competition along a wider scale They would allow more precise frameworks for resource capacities, which would also increase the velocity of transactions that occur among populations. One could also think of this as microeconomic attention to aggregates which further leads to macroeconomic gains - a link which could be encouraged by monetary policy. One reason local knowledge use platforms are needed to assist governments and central banks: all too often, it is difficult for either monetary or fiscal policy to adequately reach economic conditions in underdeveloped areas*.
Multi use platforms (which include both production and services) could provide greater labor force participation, particularly in regions where complexity in economic environments is lacking. Domestic summits would provide means for exploring underutilized resources which would benefit from new adaptations. Local economic platforms are also needed to break up some of the polarities which are increasing between urban and rural populations: polarities which only serve to make political conditions more problematic than they already are.
Not every present day platform is helpful or "complete" in the sense of transaction potential. When do platforms limit economic participation? To a degree this is true of the Amazon platform for books, which because of the marketplace it serves, generates scale factors which can sometimes discourage authors and economic activity (particularly dispersed bookstores) at the margins. This may not be so much Amazon's fault, as it is a paucity of local platforms for diverse low risk competition.
While transaction limitations re Amazon may seem counterintuitive in that one can order books from wherever they are, one problem is a lack of sufficient incentive. That is particularly the case in areas which already have limited economic activity. Many books - particularly those with high value - serve highly specific purposes. Yet one may not be inspired to buy books that would personally matter, unless friends speak of them, or they are discovered on bookstore shelves.
Some centrally designed platforms do not always come into contact with the ongoing patterns of our lives. As such, they may tend to capture already existing markets, rather than expand market growth. There are many competing interests for one's time (and purposes), which don't link up well to other time commitments. Still, the obligations one already has are not always optimal. Only consider the platform of LinkedIn, which has more social than economic value. A good economic platform is one in which - because of the correlated resource paths it delineates, makes it worthwhile to commit to time use which adds further depth.
In fairness I want to note that bookstore loss (or author market share in general) isn't just problematic in the sense of present day Amazon dominance. Knowledge use environments had begun to centralize, long before their platform came along. As to the "helpfulness" of good non fiction, individuals had knowledge use limitations in local settings, unless they were employed in high skill occupations.
What's more, even gainful employment could still mean "bare bones" knowledge use applicability. It is in the context of (hopeful) wider knowledge use at local levels that I hope for a resurgence of the bookstores which once dotted the landscape. Despite a present day lack of belief in books, they were the best representation of full scale entrepreneurial knowledge product the world has even known. Most schools are but a bare whisper of this wealth. Only consider that a resurgence in bookstores would assist real transaction gains in time use - i.e. the growing "manufacture" of human capital.
One aspect of platforms is the degree to which they are able to connect disparate elements to central infrastructure components. A good example involves decision making processes on the part of domestic summits for walkable communities. The walkable transportation component would be central. Hence other resource options would factor for it, in terms of time use coordination aggregates and density considerations.
Preexisting economies of scale need to be considered. Are economic platforms set up to enable a region or area to generate more transaction potential? If so, the proposed infrastructure seeks to make it easier for local competition which would like to remain in competition with one another. What's more, this is a kind of competition which provides tremendous benefit for consumers and locals. This is not the negative "bicycle with training wheels" interpretation of entrepreneurship that some imagine. After all, this form of business longevity comes not by government's bequest ("beneficial" regulation that excludes others) but instead exists on everyone's behalf - i.e. beneficial regulation patterns that include others.
The distinction matters, in that many larger platform formats end up as monopoly defaults by which all players are then expected to comply with. The monotony of monopoly! Whereas some participants wish to compete on terms in which creative destruction is not just about knocking down competition levels. While this involves settings of - say - either business people or teachers who appear to desire low risk environments, that doesn't mean these individuals don't want to explore or take chances. They just don't want to fail every time they try to do so. Fortunately, entrepreneurs are not the only ones who create platforms, by any means. And sometimes, platforms need to be built for entrepreneurs to generate economic growth.
After years in both employed and self employed settings, a few words about the desire for risk. Much of this comes down to factors which include the desire for challenge in one's workplace, whether that challenge is already being met, and the degree to which one might be compelled to shift from an inadequate setting. How those factors interact has considerable bearing on the risk any individual may take over the course of a lifetime. Some of us still desire to take on risk when life suggests we slow down, just the same! Suffice to say that thinking about platforms is interesting.
*Regarding underdeveloped areas of the U.S., I don't mean in the sense of rural areas not being "rural" anymore. Rather, they could further evolve greater (lifelong) economic depth which would embrace local knowledge use and services. That would provide balance for local tax burdens and obligations - particularly in today's local school environments. Graduation often means being cut off from daily routines and local activities, with little else meaningful to take their place. Even as school cultures dominate many of these small town environments (education monopoly), too many of the resources they demand never effectively benefit the student's life, afterward. That can be a long term problem not just for individuals but also the sustainability of communities in general.
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