Plug-and-Play, Mix-and-Match: A Capital Systems Theory of Digital Technology Platforms

Forthcoming, Review of Austrian Economics

27 Pages Posted: 8 Mar 2020

See all articles by L. Lynne Kiesling

L. Lynne Kiesling

Northwestern University; University of Colorado Denver; Knowledge Problem LLC

Date Written: February 11, 2020

Abstract

Digital technology platforms have transformed the modern economy, disrupting existing industries and creating new ones. In this paper I synthesize Austrian capital theory with general systems theory to analyze why these digital platforms have had such a large and relatively rapid impact. In large part this impact arises from certain architectural features of digital technologies and networks, particularly modularity, which enables digital platforms to change their scale of operations and be adaptable to unknown and changing conditions. Modularity reduces the costs of combining and reconfiguring combinations of individual elements in networks. Austrian capital theory’s focus on the combination of specific capital elements in production thus provides a valuable lens through which to analyze digital technology platforms and the economic reasons for their large and rapid development.

Keywords: digital platforms, platform economics, modularity, systems theory, Austrian capital theory

JEL Classification: D49, L22, O39

Suggested Citation

Kiesling, L. Lynne, Plug-and-Play, Mix-and-Match: A Capital Systems Theory of Digital Technology Platforms (February 11, 2020). Forthcoming, Review of Austrian Economics, Available at SSRN: https://ssrn.com/abstract=3537197 or http://dx.doi.org/10.2139/ssrn.3537197

L. Lynne Kiesling (Contact Author)

Northwestern University ( email )

375 E Chicago Ave
Chicago, IL 60611
United States

University of Colorado Denver ( email )

1475 Lawrence St
Denver, CO 80238-3363
United States

Knowledge Problem LLC ( email )

Chicago, IL 60613
United States

HOME PAGE: http://www.lynnekiesling.com

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