While the players were able to act relatively freely on the markets in the last few years, a comprehensive set of rules is being designed here. It becomes clear that it is a work penned by the ministry of economics: It develops general ideas of how to maintain the achievements of social market economy and at the same time strives for protection of specific German economic interests, in particular in the area of industry 4.
Digitalization supports scenarios in the area of digital platforms that lead to monopolization and centralization. The background for this are, from an economic point of view, the marginal costs for digital projects, which tend towards zero, in combination with high fixed costs.
This leads to rising economies of scale. The platform function as such is also mostly digital and therefore subject to the same laws of scalability. The resulting natural monopolies are reinforced additionally by network effects and standards. The business model of a platform is in connecting two or several groups of users and permitting direct transactions or other forms of interaction between them. This market function as such is not new, but takes place in shopping centers or classified ads sections in traditional newspapers as well.
The innovation was that information technology has reduced the necessity of own physical resources for market place operators. In addition to platforms that are based on a dedicated strong product range e. Credit marketplaces fall into this category as well. In contrast to the conventional production, where control and optimal allocation of resources is an essential factor for success, digital platforms focus on promotion of the entire ecosystem and use of the positive network effect Van Alstyne et al.
In addition to combination of supply and demand in the narrower sense, the platforms offer many additional services in areas like payment processing or mechanisms for reputation management; these are of particular interest for smaller companies. Even though developing into a digital platform is attractive for companies, this step is only realistic for a small number of companies.
