Chapter 35 — Key Takeaways
Three features of digital markets
- Network effects → winner-take-all (Google, Facebook, Amazon)
- Near-zero marginal cost → subscription/ad/freemium models (P ≈ MC ≈ $0 won't work)
- Data as input → data flywheel reinforces dominance
Platform economics
Two-sided markets connect two groups. Pricing is asymmetric (one side subsidized). Examples: Uber (riders subsidized to attract drivers), social media (users free to attract advertisers).
AI and labor
- Augmentation (optimistic): AI complements workers, demand stays high
- Displacement (pessimistic): AI replaces whole job categories
- Polarization (most evidence): high-skill and low-skill grow; middle hollows out
Gig economy
Central question: employees or contractors? Employees get protections but less flexibility. Contractors get flexibility but no safety net. Unresolved policy debate.
Millbrook Innovation Hub
The town's bet on the tech economy. Success depends on network effects, talent, capital, and infrastructure.