In business school, we teach that platforms create value through coring. Coring is the steps a digital platform takes to make sure that interactions between different user groups go well, and that as a consequence they wish to return to the platform and use it again. As such, platforms typically take on a governance role and actively manage interactions between different user groups. This article discusses two implications of this business school concept for competition economics: Market definition and the recent Supreme Court Decision for Amex.

By Catherine Tucker[1]

 

I. WHAT IS CORING?

Platforms enable multiple distinct groups of users to interact with one another, and platform economists refer to the practice of actively managing these interactions to ensure they go well as “coring.[2]

A platform acts as a “core” for these interactions by adopting technology. policies, and procedures that facilitate the interaction taking place, build trust in the interactions, and provide incentives for interactions to stay on the platform. This often requires transaction platforms to establish governance mechanisms based on observable transactions that ensure successful interactions.

With interactions that are observable, transaction platform operators can track the quality of the interactions and user satisfaction based on the nature of the transactions (e.g., guaranteeing secure transfer of payment information or identifying accurate matches for user searches).

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