Are online platforms killing the offline star? Platform diffusion and the productivity of traditional firms

Hélia Costa, Giuseppe Nicoletti, Mauro Pisu and Christina von Rueden

No 1682, OECD Economics Department Working Papers from OECD Publishing

Abstract: Online platform use has grown remarkably in the last decade. Despite this, our understanding of its implications for economic outcomes is scarce and often limited to case studies and advanced countries. Using a newly built harmonised international dataset of online platforms and their use across 43 countries, covering the 2013-18 period and seven areas of activity, we contribute to filling this gap. Specifically, we investigate whether and under which market conditions platform uptake leads to changes in incumbent firms’ productivity. We find that platform use increases labour productivity growth in firms operating in the same sector, and that this takes place through increases in value added growth as opposed to decreases in employment. What is more, productivity gains are greater for small firms and firms in the middle of the productivity distribution, suggesting that online platforms can play an important role in levelling the playing field between SMEs and large companies and in narrowing productivity gaps among firms. Finally, productivity gains are stronger in more dynamic platform markets. Our findings offer insights on factors and policies that can be leveraged to encourage platform development in ways that are beneficial for the economy.

Keywords: digitalisation; firm behaviour; online platforms; Productivity (search for similar items in EconPapers)
JEL-codes: D22 D24 O33 O47 (search for similar items in EconPapers)
Date: 2021-10-05
New Economics Papers: this item is included in nep-bec, nep-lma, nep-pay, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:oec:ecoaaa:1682-en

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