Consumer Dependence in Multi-Sided Platforms
Chapter from the book: Karapınar Kocağ, E. & İnce Yenilmez, M. (eds.) 2024. Contemporary Microeconomics Applications.

Bahar Baysal Kar
Bursa Uludağ University

Synopsis

Although platforms are "intermediary" firms that are discussed more in terms of "efficiency" in economics, the alliance between the platform firms, investors supporting the platform firms and consumers are of great importance in the success of these firms and the continuity of this success. In the literature, this aspect, which is the basis of the platform model, usually remains in the background. The power relations between platform companies, investors, consumers, labor and regulators that dominate this model are implicitly examined. In this chapter it is discussed why consumers are allies of this alliance. Accordingly, platform companies legitimize their activities under the discourse of "consumer interest". Consumers gain various benefits and advantages from these activities (low price, fast delivery, innovation, multiplicity of alternatives, wider social environment, etc.). The strengthening of the platform's position in the market and gaining market power does not mean high prices and low production for the consumer, unlike traditional imperfect competition markets. On the contrary, it increases consumers' trust and loyalty to platform companies. For this reason, although the dominance of the consumer is traditionally mentioned in the capitalist system, its evolution towards consumer dependence in platform capitalism, despite practices that harm consumers such as access to consumer data, gives platform companies political power against regulations that policymakers and regulators may make against them. Because policy makers' regulations that increase competition and prevent the platforms' activities mean that consumers would be deprived of the benefits and advantages they provide. Due to the reaction that may arise from this deprivation, policy makers do not want to take on such a large electorate. Despite this, the regulation that can be made would vary according to the priority target or priority segment. In addition, under certain restrictions a consciousness that can be developed among consumers to improve the situation of the gig workers, which is the loser of this new model, can lead to platform companies to make regulations in favor of this segment.

How to cite this book

Baysal Kar, B. (2024). Consumer Dependence in Multi-Sided Platforms. In: Karapınar Kocağ, E. & İnce Yenilmez, M. (eds.), Contemporary Microeconomics Applications. Özgür Publications. DOI: https://doi.org/10.58830/ozgur.pub583.c2400

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Published

December 24, 2024

DOI