Platform Firms in the US Economy

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Questions and Answers

What is cited as a key factor in the United States' lead in platform firm development?

  • Strict government regulations on technology companies.
  • Military spending on research and development. (correct)
  • A focus on incremental technological change.
  • The lack of available financial capital.

In the context of platform firms, what does the 'fragmentation of state regulatory capacity' refer to?

  • The division of labor within platform companies.
  • The sharing of regulatory powers between multiple countries.
  • The limited ability of different states to apply uniform regulations. (correct)
  • The overabundance of regulations that make following them difficult.

According to the content, which aspect of US antitrust law has supported the platform business model?

  • Its restrictive approach to intellectual property.
  • Its focus on protecting established businesses.
  • Its primary goal of preventing monopolies.
  • Its pro-consumer orientation. (correct)

Which of these most accurately describes the ‘patient capital’ mentioned in the text?

<p>Investment capital available for long-term growth. (D)</p> Signup and view all the answers

What is a key challenge posed by the emergence of new corporate forms, such as platform firms?

<p>They operate in areas not well covered by existing regulations. (A)</p> Signup and view all the answers

What kind of innovation does the US political economy tend to support?

<p>Radical innovation. (C)</p> Signup and view all the answers

Besides technological innovation, which of these is cited as a necessary condition for new technologies to reach broad markets?

<p>Adaptation to the needs of consumers. (A)</p> Signup and view all the answers

Which of the following was NOT cited as contributing to the permissive environment in the United States for platform firms?

<p>Strong, centralized regulatory capacity. (A)</p> Signup and view all the answers

What is NOT typically cited as a reason for the United States' leadership in platform capitalism?

<p>The presence of strong labor unions and regulatory bodies. (A)</p> Signup and view all the answers

Which characteristic of the US regulatory environment has facilitated the rapid expansion of platform networks?

<p>Fragmented policy landscape with overlapping jurisdictions. (D)</p> Signup and view all the answers

What is a political-economic characteristic the text identifies as being associated with the consumer-investor coalition that the platform economy relies on?

<p>A legal institutional regime that nurtures and supports the same coalition. (C)</p> Signup and view all the answers

What type of capital does the text say is required for platform firms to achieve scale?

<p>Abundant sums of patient capital. (B)</p> Signup and view all the answers

What is essential for modernizing restraints on corporate power in the face of platform capitalism?

<p>New approaches to regulatory institutional change and labor organizing. (B)</p> Signup and view all the answers

According to Gifford and Kudrie, what is a primary difference in focus between European and US competition law?

<p>European law places a stronger emphasis on social justice, while US law focuses on efficiency. (A)</p> Signup and view all the answers

What is cited in the text as the basis for the social contract in the twentieth century?

<p>An ideal typical conception of the consolidated firm. (A)</p> Signup and view all the answers

How does EU law typically approach the issue of dominant firms abusing market power?

<p>It is more likely to intervene compared to the United States. (D)</p> Signup and view all the answers

What was a common aspect of the twentieth-century firms like General Motors or Ford?

<p>They had long career ladders and employee mobility. (D)</p> Signup and view all the answers

What does the 'European reflex' in competition policy primarily favor?

<p>Maintaining the status quo and ensuring fairness among market participants. (A)</p> Signup and view all the answers

What is a defining characteristic of the American political economy, that has contributed to the extreme manifestation of platform capitalism?

<p>Its heavily financialized nature. (D)</p> Signup and view all the answers

How does the European Union's competition policy view 'new economy' firms in innovation-intensive sectors?

<p>It refuses any special consideration, treating them similarly to other firms. (D)</p> Signup and view all the answers

What is a major difference between the US and EU approaches to competition law regarding non-consumer objectives?

<p>The EU law may serve other objectives, while US antitrust law primarily focuses on consumer welfare. (A)</p> Signup and view all the answers

How do companies like Amazon and Uber use consumer benefits in the US context?

<p>To limit their own political exposure and maintain social legitimacy in the current regulatory frameworks. (C)</p> Signup and view all the answers

For platform firms, what is a key characteristic of the investors that provide funding?

<p>They are willing to underwrite early-stage losses in anticipation of long-term gains. (C)</p> Signup and view all the answers

Which of the following best describes the role of consumerism in US antitrust law?

<p>It reinforces a pervasive ideology that can shield companies from antitrust interventions. (B)</p> Signup and view all the answers

According to the provided material, which of the following concepts is NOT directly associated with the analysis of corporations in the 21st century?

<p>Vertical integration (D)</p> Signup and view all the answers

The ‘fissured workplace’ concept, as discussed in the provided content, primarily refers to:

<p>A workplace where tasks are highly specialized and segmented, often involving subcontracting and indirect employment. (D)</p> Signup and view all the answers

Which of these is most closely associated with the critique of shareholder primacy in the provided material?

<p>The argument that corporations should consider the interests of all stakeholders, not just shareholders. (D)</p> Signup and view all the answers

The rise of the platform economy, as highlighted in the provided material, is best exemplified by:

<p>Technology companies that facilitate interactions between users, like vendors and buyers. (B)</p> Signup and view all the answers

Which concept does the provided material NOT address in the context of corporate governance and power?

<p>The significance of environmental sustainability practices within corporations. (D)</p> Signup and view all the answers

Based on the provided text, which of the following describes a key transformation in how some major employers operate?

<p>A departure from selling products to renting workers. (A)</p> Signup and view all the answers

Which author is credited with significant work on the ‘fissured workplace’ according to the provided material?

<p>David Weil (A)</p> Signup and view all the answers

The information provided discusses the concept of 'corporate power' in the twenty-first century. Which of these factors is presented as contributing to the shifting dynamics of this power?

<p>The increasing importance of platform-based business models. (A)</p> Signup and view all the answers

Which company is identified as the first expression of mass retail platform power in a pre-internet world?

<p>Walmart (D)</p> Signup and view all the answers

What is a common characteristic seen in both 'offline' and technology-enabled platforms?

<p>Management of upstream suppliers and downstream producers by a lead brand. (B)</p> Signup and view all the answers

What is one of the key metrics used by YouGov in their global brand health index?

<p>Perceptions of a brand's quality, value, and reputation (C)</p> Signup and view all the answers

Which of these companies does the text NOT directly identify as being in the top ten of the global brand health index?

<p>Netflix (C)</p> Signup and view all the answers

Based on the information, who was involved in the analysis of 'Are We All Amazon Primed?'?

<p>Pepper Culpepper and Kathleen Thelen (B)</p> Signup and view all the answers

What was the result of city governments pushing back against Uber?

<p>Uber experienced some setbacks but continued to use the same strategy in other areas. (D)</p> Signup and view all the answers

Which of the following does not relate to the concept of 'platform power' as described in the text?

<p>The total number of customers an organization has. (C)</p> Signup and view all the answers

According to the Morning Consult poll, what was the approximate approval rating for top companies in the United States?

<p>70 percent or higher (B)</p> Signup and view all the answers

According to Gutiérrez and Philippon, what is the primary reason for the difference in antitrust enforcement between the EU and the US?

<p>US regulators face greater political pressure than their EU counterparts. (B)</p> Signup and view all the answers

What is suggested about the consistency of the observation of differences in EU and US antitrust policies and the analysis in Varieties of Capitalism?

<p>The observation aligns with the analysis. (D)</p> Signup and view all the answers

Which factor do Gutiérrez and Philippon suggest is a key differentiator in the enforcement of competition policy between the EU and the US?

<p>The relative independence of regulators from political influence. (D)</p> Signup and view all the answers

What is implied about the political embedding of European antitrust regulators compared to their US counterparts?

<p>European regulators are less affected by the domestic politics of individual member states. (B)</p> Signup and view all the answers

How are US regulators influenced in the context of enforcing competition policy?

<p>Through political pressure, such as lobbying. (D)</p> Signup and view all the answers

What does the text suggest about the political organization of financial interests in the United States?

<p>They are well-organized politically, similar to the Business Roundtable. (C)</p> Signup and view all the answers

According to Hall and Soskice, how is venture capital viewed in the context of liberal-market-economies?

<p>It is considered an important, but not entirely typical, exception to short-termism. (C)</p> Signup and view all the answers

Which of the following groups is cited as being politically well-organized in the text?

<p>Financial Services Roundtable, representing major financial companies. (A)</p> Signup and view all the answers

Flashcards

Consolidated Firm

The traditional model of a large, stable company with many employees, unionization, benefits, and a clear hierarchy, exemplified by General Motors or Ford.

Transformations of the Firm

The shift from traditional, consolidated firms to a new model driven by digital platforms, characterized by flexible work arrangements, complex ownership structures, and a focus on data and algorithms.

Corporate Consolidation

The process of companies becoming increasingly large and influential, often through mergers and acquisitions, and exerting more control over markets and resources.

Corporate Agility

The ability of firms to adapt quickly to changing circumstances, such as market trends or technological advancements, by being agile and flexible in their operations.

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Platform Capitalism

The rise of digital platforms, such as Amazon, Facebook, or Google, that have disrupted traditional business models and transformed the economic landscape.

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Personalized Experiences

The ability of companies to leverage data and technology to personalize their products and services, creating a tailored experience for each customer.

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Fissurization

The trend of companies using complex ownership structures and outsourcing work, often to temporary or contract workers, to reduce costs and increase flexibility. This leads to less job security and fewer benefits for employees.

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Financialization

The practice of companies using financial tools, such as debt and equity financing, to fund their growth and expansion. This can lead to increased financial risk and a focus on short-term profits.

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Government's role in platform technology

The US government, particularly the Department of Defense, played a crucial role in developing the core technologies that underpin platform firms.

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US political economy and platform firms

The US political economy, with its emphasis on radical innovation, encouraged the development of platform firms.

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Fragmentation of regulation and platform firms

Limited regulation and weak countervailing pressures allowed platform firms to gain a foothold in the US market.

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Antitrust law and platform firms

US antitrust law's consumer-centric approach actively promotes the platform model.

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Financialization and platform firms

The US political economy's heavy reliance on finance provides ample resources for platform firms.

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Platform firms and regulatory challenges

The rise of platform firms poses challenges to existing regulations from the industrial era.

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US vs. Europe: Platform firm success

Differences in political structures and legal systems contributed to the success of platform firms in the US compared to Europe.

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Platform firms: Factors of success

The rise of platform firms is influenced by a complex interplay of technological development, political economy, and regulatory structures.

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EU vs. US Competition Law

EU competition law places more emphasis on protecting smaller businesses and consumers from powerful companies than US law, which prioritizes economic efficiency.

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Abuse of Dominant Position

The idea that powerful firms may abuse their dominant market position, potentially harming competitors and consumers.

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European Skepticism towards 'New Economy' Firms

EU antitrust law is more cautious about new technology companies, potentially favoring existing businesses over disruptive innovation.

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US Antitrust Focus on Consumer Welfare

US antitrust law often emphasizes promoting consumer welfare, such as offering lower prices or better services, which can favor large companies that can provide these benefits.

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Antitrust Legitimacy through Customer Focus

Large companies like Amazon and Uber use their emphasis on customer benefits, like lower prices or better services, to gain legitimacy and political support, potentially mitigating potential antitrust scrutiny.

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Platform Firm Financing

Large platform companies rely heavily on investors willing to accept significant losses in the short term, hoping to achieve dominant market share and significant profits later.

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US Consumerism Ideology

The prevalent ideology in the United States that emphasizes individual consumption and consumer choice as a key driver of economic well-being.

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Winner-Take-All Investment

The tendency for investors to favor companies with high potential for future growth, even though they may currently be unprofitable.

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Enforcement as the Key Difference in Antitrust

The idea that the differences between US and EU antitrust policies mainly stem from how strictly they are enforced, not necessarily from different laws.

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Oligopoly

A situation where a limited number of companies are engaged in a market, typically due to barriers to entry or economies of scale, resulting in reduced competition, potential market dominance, and potential price manipulation.

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Shareholder Primacy

A theory proposing that corporations prioritize shareholder value and financial performance over all other considerations, including social responsibility and employee well-being.

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US Antitrust and Political Influence

Suggests that US antitrust regulators are more susceptible to political influence (lobbying, campaign contributions) compared to their EU counterparts, who are less influenced by politics.

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Shareholder-centric Model

A model of corporate governance that emphasizes shareholder rights and financial performance as the main objectives, often at the expense of other stakeholders, like employees or the environment.

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Platform Economy

A broad term encompassing a range of technologies and business models that rely on digital platforms, vast data analysis, and network effects to generate value and connect users.

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Gig Economy

A specific type of platform economy where companies facilitate the exchange of temporary workers and services, often through online platforms and algorithms.

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Corporate Power Concentration

A situation where corporate power has become increasingly concentrated in the hands of a few large companies, often those operating in the digital and technology sectors, which can lead to potential challenges in competition, regulation, and democratic governance.

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Managed by the Markets

A model of corporate governance that prioritizes financial performance and shareholder value often at the expense of other stakeholder interests, including employees, communities, and the environment. It emphasizes short-term profits and market efficiency.

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Shareholder Value Maximization

A situation where corporate governance focuses primarily on shareholder interests and maximizing financial performance, which can lead to a focus on short-term profits, potential exploitation of workers, and neglect of social responsibility.

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Scalable Startup

A type of company that relies on innovation, data, and technology to scale quickly and disrupt existing markets.

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Study Notes

Introduction

  • This article explores the transformation of twenty-first-century capitalism, focusing on platform business models.
  • Existing literature often attributes the change to market and technological developments.
  • This article highlights the political forces driving this transformation, contrasting the twentieth-century firm with the platform firm.
  • The article analyzes the US political-economic context, emphasizing its role in facilitating platform capitalism and exacerbating associated inequalities.

Abstract

  • The article explores the changing nature of 21st-century capitalism, emphasizing political coalitions and institutional factors that support it.
  • Existing literature often focuses on market and technological changes.
  • The article emphasizes political forces driving the transformation from the traditional firm to the platform firm.
  • The US is analyzed comparatively, highlighting how its political-economic institutions facilitate platform transformations and inequalities.

Keywords

  • United States
  • Political economy
  • Platform capitalism
  • Antitrust
  • Consumers

Platform Capitalism

  • Uber exemplifies excesses and promise of 21st-century capitalism.
  • The gig economy characterizes the platform firm, with precarious and yet optimized work for firms and users.
  • Platform firms represent a new form of enterprise.
  • Relationships with investors and driver-partners/employees reflect this new form.

Network of Contracts (NOC)

  • The mid-century firm embodied reciprocal relationships with internal and external stakeholders.
  • Stable long-term growth supported by long-term capital (e.g., banks in Europe, dispersed shareholders in US).
  • The 20th century saw a shareholder revolution.
  • This shift in power from firms and managers to investors and securities analysts changed the firm's structure.
  • The firm shifted into a network of contracts (NOC).
  • "Nikefication" is a core feature of the NOC model, downsizing for value maximization by aggressive outsourcing and asset stripping.

Platform Firm

  • The 21st century firm is a platform-based business model.
  • The model builds on 1980s/1990s developments.
  • The platform firm gathers immense data, acting as a critical intermediary and market maker.
  • Examples include service (Uber, Upwork), goods (Amazon), and information platforms (Google, Facebook).

Market Dominance

  • Some contemporary platform firms wield massive market dominance, comparable to classic monopolies.
  • Dominance isn't about ownership, but deeper control of actions within the platform's infrastructure.
  • Indicators like market capitalization and market share might underestimate the true extent of dominance.

Key Political-Economic Factors Facilitate Platform Capitalism

  • Patient capital back the platform firms' strategies, contrasting with the more short-termism of the NOC firm.
  • The investor's focus in today's platform firms is mainly on market dominance and creating the foundational infrastructure of a sector.
  • Consumers are vital in the strategy of platform firms.
  • An active role in the public narrative and political discourse.

US Political Context Enables Platform Capitalism

  • US fragmented policy landscape enables rapid network expansion.
  • US strong consumer-investor coalition supports the platform model.
  • The highly financialised US political context provides the capital that enables platform growth.

The Changing Nature of the Firm

  • The traditional firm was characterized by internal integration with a large stable workforce and a nexus of reciprocal relationships between internal and external stakeholders.
  • The NOC firm emerged, prioritizing investor interests and marked by aggressive outsourcing, streamlined production, and a shift away from traditional employment models.
  • Platform firms represent a distinct evolution, characterized by:
  • network effects
  • collaborative control
  • user-centric dynamics
  • intense data collection

Counter-argument

  • Platform firms are different from the previous forms since the focus of their success is not on direct ownership, but on control through platform algorithms to manage actions of all stakeholders.

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