Digital Economy

Towards efficient information sharing in network markets (Bertin Martens, Geoffrey Parker, Georgios Petropoulos, Maeshall Van Alstyne, Bruegel)

Digital platforms facilitate interactions between consumers and merchants that allow collection of profiling information, which drives innovation and welfare. Private incentives, however, lead to information asymmetries resulting in market failures both on-platform, among merchants, and off-platform, among competing platforms. This paper develops two product-differentiation models to study private and social incentives to share information within and between platforms. We show that there is scope for ex-ante regulation of mandatory data sharing that improves social welfare better than competing interventions, such as barring entry, break-up, forced divestiture or limiting recommendation steering. These alternate proposals do not make efficient use of information. We argue that the location of data access matters and develop a regulatory framework that introduces a new data right for platform users, the in-situ data right, which is associated with positive welfare gains. By construction, this right enables effective sharing of information together with its context, without reducing the value created by network effects. It also enables regulatory oversight but limits data privacy leakages. We discuss crucial elements of its implementation in order to achieve innovation-friendly and competitive digital markets.

Recommended citation:
Martens, B., G. Parker, G. Petropoulos and M. Van Alstyne (2021) ‘Towards efficient information sharing in network markets’, Working Paper 12/2021, Bruegel

Towards efficient information sharing in network markets | Bruegel

Digital Economy Sovereign Funds

The hunt for tech unicorns: How sovereign funds accelerate the digital economy (Winston Ma, ORF)

In July 2021, the food delivery company Zomato went ahead with its planned Initial Public Offering (IPO) in the Bombay Stock Exchange, becoming India’s seventh largest IPO of all time. The company raised US $564 million, and its anchor investors included sovereign investment funds like ADIA (UAE), CPP (Canada), OMERS (Canada), and GIC (Singapore). Prior to the IPO, the company had raised US $2.1 billion through private financing rounds, where the Singaporean government fund Temasek was estimated to have invested US $100 million.

The hunt for tech unicorns: How sovereign funds accelerate the digital economy | ORF (