The sixth report in our series dealing with networks, platforms, markets and the economics of order (pdf, 45 pages, including a six-page summary of conclusions). Details below, with a link to a downloadable pdf table of contents.
Much is riding on our ability to understand networks, but they are complex, subtle, and, despite their high profile, widely misunderstood and underappreciated in the press, industry commentary, the public sector and the academic world.
Modern life and the modern economy are ever more reliant on networks. Networks change society in lasting and disruptive ways. They absorb enormous investment. New networks are popular as speculative investments. Networks are subject to substantial government oversight, whether by means of regulation, antitrust or policy.
In these circumstances, as investors, managers, policy-makers and regulators, should we expect a poor understanding of networks to be costless?
There has been a failure to grasp the core of networks. The result is confusion as to what constitutes a network, how networks and platforms differ, what determines the value of a network and what creates stability in a network, among many other areas. The inevitable result is that decision-makers in both the private and public sectors will misinterpret market conditions, investment opportunities or the market positions of service providers.
Stinson Analytical is devoted to the idea that both the economics of networks and their wide implications for what are presently considered to be other areas of economics are not even remotely well understood.
Stinson Analytical decided to start over, to create a simpler, more useful, more fundamental and better unified framework. As is often the case, clarity reveals many new and unexpected insights.
Our focus in this series is largely on networks and less on platforms, as the individual report descriptions will make clear. By “networks”, we mean networks in the economic sense and not in the sense of simply a pattern of social relationships (although our work has relevance for social networks).
While economic concepts are used and explained, the emphasis throughout is on simplicity, brevity, logic and qualitative insight. Only the most basic prior knowledge of economics and finance is needed. There are six reports in this now completed series. They are listed below, beginning with the most recent.