The Economics of Internet Markets
The internet has facilitated the creation of new markets characterized by large scale, increased customization, rapid innovation and the collection and use of detailed consumer and market data. I describe these changes and some of the economic theory that has been useful for thinking about online advertising markets, retail and business-to-business e-commerce, internet job matching and financial exchanges, and other internet platforms. I also discuss the empirical evidence on competition and consumer behavior in internet markets and some directions for future research.
This paper was an invited talk at the Econometric Society World Congress in Shanghai. I thank my discussant Yeon-Koo Che, and also Liran Einav, Richard Levin and Andy Skrzypacz for helpful discussions. Marissa Beck provided excellent research assistance. In the last five years, I have received research funding or compensation from the Toulouse Network for Information Technology, Yahoo!, eBay Research, the National Science Foundation, and the Sloan Foundation. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.