What type of economics of scale do characterise digital platforms?1 pointSupply side Demand side

Digital platforms are typically characterized by both supply-side and demand-side economies of scale.

1. Supply-side economies of scale: These occur when the cost per unit decreases as the volume of output increases. For digital platforms, the cost of producing digital goods or services (like a software or a digital content) decreases as the number of units produced increases. This is because the initial cost of creating the first unit (like developing the software or creating the content) is often high, but the cost of producing additional units is relatively low.

2. Demand-side economies of scale: These occur when the value of a product or service increases as more people use it. For digital platforms, this is often the case because they tend to become more valuable as more people join and use the platform. This is often referred to as the network effect. For example, a social media platform becomes