Big Data and Digital Market Concentration

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bachelor_Suni_Iiris_2023.pdf (316.61 KB)

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School of Business | Bachelor's thesis
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Date

2023

Department

Taloustieteen laitos

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Mcode

Degree programme

Taloustiede

Language

en

Pages

26+7

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Abstract

The digital market is described as a "winner-take-all" market in which the ultimate result is an oligopoly. Network effects are a key characteristic of the digital multi-sided markets, and they can cause concentration issues. Big Data is among the newest digital trends and many firms are investing in analyzing it to gain an edge over their competition and to gain even more market power. This literature review aims to discuss the possibility that Big Data might cause even further concentration in the market leading to more monopolistic competition and thus deadweight loss issues and efficiency issues. The role of Big Data as a rare input is much debated. However, it is agreed that data allows for significant cost reductions throughout production. It seems that data allows entry to connected markets with lower costs and allows dominating companies to tip these related markets to their benefit. Big data seems to heighten winner-take-all market dynamics when it comes to decreasing marginal costs, network effects, and economies of scale and scope.

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Thesis advisor

Kitti, Mitri

Keywords

winner-take-all, network effects, big data, platform economy

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Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202310296677

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[kand] Kauppakorkeakoulu / BIZ (Open Access)