Electronic copy available at: http://ssrn.com/abstract=1086370 Review of Network Economics Vol.6, Issue 2 – June 2007 The Economics of Digital Business Models: A Framework for Analyzing the Economics of Platforms ERIC BROUSSEAU * EconomiX, Université de Paris X & IUF THIERRY PENARD CREM, Université de Rennes & Marsouin Abstract The paper proposes an analytical framework for comparing different business models for producing information goods and digital services. It is based on three dimensions that also refer to contrasted literature: the economics of matching, the economics of assembling and the economics of knowledge management. Our framework attempts to identify the principal trade-offs at the core of choices among alternative digital business models, and to compare them in terms of competitiveness and efficiency. It also highlights the role played by users in the production of information goods and competition with pure suppliers. 1 Introduction The booming growth in computers and electronic networks has greatly transformed the production and consumption of information. With the arrival of the last generation of Information Technology (IT), symbolized by the Internet, information goods and services are characterized by significant network externalities, high fixed costs and variable costs (of reproduction) tending toward zero. Those features are due both to the particularities of the technologies that have been developed to manage information – characterized by high levels of interoperability and increasing returns of adoption; cf. Shapiro and Varian (1999) – and to the specificities of information as a public good (Arrow, 1962). The notion of * Contact Author. EconomiX, Université de Paris X, Bâtiment K; 200 avenue de la République; F-92001 Nanterre Cedex; France. Email: eric@brousseau.info While working on this paper, the author was a visiting fellow at the International Center for Economic Research (ICER), Turin, Italy. ICER is warmly thanked for its support. The authors would like to thank the Centre National de la Recherche Scientifique (CNRS) for backing their research with the “Information Society” Program. We also received financial support from France Télécom Research and Development, the CDC Foundation for Research, the European Union (DG Research as part of the “Ref-Gov” Integrated project) and Marsouin (Brittany region). We would like to warmly thank all these sponsors. We also got very useful comments from participants to conferences and workshops organized by the GDR TICS (CNRS), ISNIE, ITS. We are grateful to them and to the organizers. Usual caveats apply. 81