Book review: The Business of Platforms

As I teach my ECONS101 class, a platform market occurs when a firm acts as an intermediary and brings together two (or more) groups, who otherwise would not connect or easily interact (platform markets are also known as two-sided markets, because the intermediary brings together two sides of the market). We think of platforms as mostly an invention of the digital age, because most of the examples that come to mind (TradeMe or eBay, Facebook, the Android operating system) are digital platforms. But in truth, platforms are everywhere. Credit card companies are platform firms - they bring together merchants and cardholders. Malls are platform firm - they bring together stores and customers. And so on. Once you know what to look for, you recognise just how endemic platforms have become in the modern economy.

I was interested to learn more about the business of platforms, so a few years ago I bought the 2019 book The Business of Platforms by Michael Cusumano, Annabelle Gawer, and David Yoffie. I finally got around to reading it last month. It was not a moment too soon either. I was inspired by the book to greatly expand on the platform market content in my ECONS101 class, specifically in the topic we covered last week. I'm sure they won't thank me for adding to the quantity of ideas that they may be assessed on, but the material from the book added a lot of depth to what was previously a fairly cursory description of two-sided markets.

The importance of understanding platforms is exemplified by their growing importance in the (global) economy. Cusumano et al. write that:

In short, managers and entrepreneurs in the digital age must learn to live in two worlds: the conventional economy and the platform economy.

To that, I would add that consumers and policy makers also need to understand the fundamentals of platform markets. It is there that this book excels. Cusumano et al. provide a clear description of what platform markets are, the 'winner-take-all (or most)' nature of those markets, and the different types of platform markets. They use a wide array of examples to illustrate the concepts, from Android to YouTube, and everything in-between. I'm sure that they could have easily turned the exercise into a textbook treatment. However, the numerous examples they use give more depth and provide more interesting perspective than you would get from a textbook.

After outlining the basics over the first few chapters, the book turns to common mistakes that platform firms make. Many of their examples will be familiar as exemplars of business failure, such as how Microsoft first captured the browser market with Internet Explorer, before subsequently losing their dominance to Firefox and ultimately to Google's Chrome browser. Next, the book looks at how firms can develop a platform, again carefully illustrating the pitfalls of the different options available to firms with real-world examples.

Finally, the last section looks to the future of platforms, but also takes a more normative view, advocating that platform firms should "harness platform power, but don't abuse it". Cusumano et al. have written their book with managers and entrepreneurs in mind, and this last section is an appeal to those future leaders of platform firms. In particular, they focus on antitrust issues, privacy concerns, fairness towards the workforce ("not everyone should be a contractor", and in particular that firms should self-regulate. While this section does paint a picture of how platform firms can easily become bad actors, it seems unlikely to move the needle on platform firms' worst abuses.

Overall, I really enjoyed this book. It is rare these days that a single book adds significant new content to one of the papers I teach, and I really appreciated the clarity that Cusumano et al. bring to this topic, and the way they structured their ideas in a way that was easy to follow. If you are looking to understand platform markets, this book seems essential to me, and I highly recommend it.

The tone and expression of academics on X (or Twitter)

In my previous post, I highlighted the apparent contribution of X (formerly Twitter) to toxicity on the Economics Job Market Rumors (EJMR) website. A natural follow-up question is whether and to what extent academics on X contribute to the toxicity on that platform and, by extension, to other forums such as EJMR. This recent article by Prashant Garg (Imperial College London) and Thiemo Fetzer (University of Warwick), published in the journal Nature Human Behaviour (open access), goes some way towards providing an answer.

Garg and Fetzer constructed a dataset of nearly 100,000 academics, including all of their Twitter [*] activity from 2016 to 2022. They then use large language models (ChatGPT-3.5 and GPT-4) to characterise each tweet in relation to content and tone. They assess each academic's stance on climate change, economic policy, and cultural issues. In terms of tone, they measure egocentrism (how often the academic refers to themselves in the first person), toxicity (based on the probability a tweet is classified as toxic by Google's Perspective API), and the balance between reason and emotion (measured as a ratio of 'affective terms' to 'cognitive terms' based on the Linguistic Inquiry and Word Count tool). The analysis is then largely descriptive, but nonetheless interesting.

Garg and Fetzer first find that:

...leading academics are not typically social media influencers... We found weak correlations between citation counts and Twitter metrics: citations and likes... citations and followers... and citations and content creation...

Garg and Fetzer observe that:

The weak correlation underscores that many prominent public intellectuals online gain visibility through public engagement rather than scholarly achievements, often holding lower academic credentials while commanding significant public attention, thus widening the gap between social media influencers and established academic experts.

I think that Garg and Fetzer overstate the case here. The weak correlations suggest that Twitter includes a cross-section of academics (in terms of academic quality), rather than that the top academics eschew Twitter (which would instead lead to negative correlations between measures of academic quality and Twitter engagement).

I'll put aside their results on political expression, which I round rather uninteresting. In contrast, the results in terms of tone demonstrate some interesting correlations. First, in terms of egocentrism (using self-referential terms such as 'I', 'me', 'my', and 'myself'):

Female academics... exhibit higher egocentrism than male academics...

Egocentrism increases with university ranking: academics at top-100 institutions... exhibit higher egocentrism than those from institutions ranked 101-500... US-based academics... show higher egocentrism than non-US academics

Then, in terms of toxicity:

Academics with high reach but low academic credibility... exhibit lower toxicity than those with the contrasting profile, that is, ones with low reach but high credibility...

Academics at top-100 universities... exhibit higher toxicity than those at institutions ranked 101-500... Moreover, US-based academics... exhibit higher toxicity than non-US academics...

And in terms of emotionality (or reason):

Emotionality is significantly higher among female academics... than male academics... In terms of reach and credibility, high-reach/low-credibility scholars... show significantly higher emotionality than low-reach/high-credibility scholars...

Finally, US-based academics... exhibit higher emotionality than non-US scholars...

Many of those differences will surprise no one, such as US-based academics being more egocentric and toxic in their expression on Twitter. Other differences seem to confirm familiar stereotypes, such as female academics using more emotional language than male academics. No doubt, some of the differences relate to differences in norms across different disciplines in terms of communication styles (both on Twitter and in general academic discourse). Garg and Fetzer don't control those other factors that might affect tone and expression. And before we get carried away about how toxic academics are on Twitter, Garg and Fetzer provide an important comparison with the general population. From Figure 6 in the paper:

Notice that academics (the blue line) exhibit far less toxicity (in the graph in the top middle) than the general population of Twitter users (the red line). Moreover, the trend in toxicity is downwards (for academics over the whole period from 2016 to 2023, and for the general population from 2021 to 2023). So, academics are not the main problem in terms of toxicity in the discourse on Twitter.

Nevertheless, there are important differences across academics, and one difference in particular stands out. Academics with high reach (those that are very active on Twitter) but low academic credibility (they are not highly credible academics, as measured by citations) exhibit less toxic expression on Twitter than other academics, particularly those who have low reach but high academic credibility. In their conclusion, Garg and Fetzer focus on this as a problem because:

...those with the greatest public reach may not represent top scholars, potentially distorting public perceptions

However, I see the opposite problem. In terms of tone, the top scholars with the lowest reach have the most toxic expression. Are those the sorts of academics that we want to promote even further on social media? I would suggest not.

What is a better option? First, more highly credible academics should be encouraged to engage in the social media discourse. However, it is important to recognise that credibility alone is not enough. What is needed are credible academics who also model constructive discourse without the toxicity, raising the standard of debate. However, as noted in yesterday's post, many high-quality (especially female) scholars are targets of hostility on social media. These are not separate issues.

Alternatively, we could raise the standard of academic discourse on Twitter more generally, without changing who is represented on the platform. That would reduce the toxic nature of the interactions. Stop laughing! It could happen. The tone and expression of academics on X (or Twitter) matters. Academics can set the standards for everyone else. We don't need to descend into the toxic culture wars that play out each day on social media. We are better than that, and if we show ourselves to be such, maybe more people will listen.

[HT: Marginal Revolution, last year]

*****

[*] I refer to the platform mostly as Twitter, because it didn't change names to X until July 2023, after Garg and Fetzer's dataset ends.

More on the toxic environment in Economics Job Market Rumors

The Economics Job Market Rumors (EJMR) website began as a forum for PhD students to discuss the economics job market, but it has long since become notorious for misogyny, racism, and other toxic behaviour (see this post, for example), due in large part to the anonymous nature of the platform. And even though the user community at EJMR has been called out for their behaviour, it doesn't seem to have gotten much better over time. This is documented by this 2025 article by Florian Ederer (Boston University), Paul Goldsmith-Pinkham, and Kyle Jensen (both Yale University), published in the journal AEA Papers and Proceedings (ungated earlier version here).

Ederer et al. analyse content from EJMR over the period from January 2012 to May 2023, documenting a number of changes. First:

...starting in 2018, EJMR saw an explosion in discussions initiated by references to Twitter posts. This shift mirrors Twitter’s growing importance as a real-time source of information and debate in academic and public policy circles.

Twitter (now X) essentially took over from YouTube as being the source of initial references on EJMR from about 2018, which is about the time of the earlier research on toxicity and misogyny on the platform. There were also surprising declines in Marginal Revolution and NBER links as the starting point for EJMR discussions. Given the predominance of Twitter as a source, Ederer et al. then look in more detail at which Twitter accounts were most referenced, reporting that:

These accounts can be broadly categorized into three main groups: economists, right-wing commentators, and journalists. The group of economists (e.g., Claudia_Sahm, jenniferdoleac, and JustinWolfers) includes academic and professional economists from diverse institutions whose tweets often serve as springboards for debates on research findings, policy implications, and professional conduct. The second group includes polarizing and predominantly conservative commentators and agitators (e.g., realChrisBrunet, RichardHanania, and libsoftiktok) and reflects EJMR’s right-wing slant and engagement with contentious political and social issues. The third group is a collection of news sources and journalistic accounts, many of which have a conservative slant (e.g., visegrad24, disclosetv, and nypost).

Finally, Ederer et al. characterise the posts linking to each Twitter account in terms of 'hate speech', 'negativity', 'misogyny', and 'toxicity' (based on measures from their companion paper here), finding that:

Among the 10 most frequently mentioned Twitter accounts, there are four economists, including three female economists. EJMR posts referencing two of these female economists (Claudia_Sahm and jenniferdoleac) have very high average z-scores of 1.974 and 2.598 for the Misogynistic classifier, indicating that EJMR posters discuss them in strongly misogynistic terms compared to all other Twitter accounts mentioned on EJMR... The only other large average z-score for the Misogynistic measure is for EJMR posts referencing elben (z-score Misogynistic = 0.956), an academic economist who has championed LGBTQ-inclusive policies in the economics profession.

In other words, since 2018 EJMR has remained a hostile and misogynistic platform, with its toxicity increasingly fed by same antagonism and culture-war discourse on Twitter/X. EJMR is not just an academic forum, but has become part of that broader hostile ecosystem.

Economists need places where they can share research in progress, ideas, and practical advice, especially early in their careers. In its early days, EJMR served that purpose. However, it has long since become a space that early career economists are better off avoiding.

[HT: Marginal Revolution, in January last year]

Read more:

• The toxic environment for women in econjobrumors.com

This week in research #119

Here's what caught my eye in research over the past week (another very quiet week, it seems):

• Clemens et al. analyse the effect of California's $20 fast food minimum wage, which was implemented in 2024, and find that food away from home prices increased by 3.3 to 3.6 percent in areas subject to the minimum wage relative to control areas (so firms passed on their cost increase to consumers)