On May 23rd, one of the world's top economists, Nobel Laureate in Economic Sciences in 2014, Professor Jean Tirole from Toulouse School of Economics in France, flexibly joined Fudan University. He was appointed as the Co-Chair of the Academic Committee of the "Fudan-TSE Research Institute of Innovation and Digital Economics" (FT-RIDE), alongside Professor Zhang Jun, a senior professor at Fudan University and the dean of the School of Economics.
Jean Tirole is the second Nobel Prize laureate to join Fudan University, following Nobel Laureate in Chemistry Michael Levitt in 2013. He is known as a "encyclopedic genius economist" and has made outstanding contributions to almost all areas of modern economics. These areas include, but are not limited to, macroeconomics, industrial organization theory, game theory, incentive theory, innovation and intellectual property, corporate finance, as well as psychology and behavioral economics.
FT-RIDE is a research institution jointly established by Fudan University and Toulouse School of Economics in France. It was officially launched in November 2022 during the centenary celebration of Fudan's School of Economics. Toulouse School of Economics, located in Toulouse, France, is one of the world's top schools of economics. The cooperation with Toulouse School of Economics, along with the introduction of renowned economists like Tirole, will provide new impetus for the development of Fudan University's "Double First-Class" discipline and the "First Fudan" initiative.
Jin Li, an academician of the Chinese Academy of Sciences and the President of Fudan University, extended a warm welcome to Professor Tirole's appointment, expressing the hope that both parties would work together to build FT-RIDE into a high-level academic platform with international reputation in the fields of innovation and digital economics. This platform is expected to contribute to the development of original economic theories in China and become a bridge for strengthening the traditional friendship between China and France.
During the appointment ceremony, it was announced that, according to the agreement between the two universities, Professor Zhang Jun and Professor Stéphane Straub of Toulouse School of Economics would serve as Co-Directors of FT-RIDE, while Professor Kou Zonglai, the Vice Dean of the School of Economics at Fudan University, would serve as the Executive Vice Director of FT-RIDE.
The Platform's Role as a Fair "Gatekeeper" in the Digital Ecosystem
"Prominent platforms like WeChat, Apple, Amazon, Google, and others have become the 'gatekeepers' of the digital economy, controlling the channels through which merchants, application developers, and advertisers reach consumers," explained Tirole. "However, many platforms face issues such as charging merchants excessively and showing self-preference, necessitating effective regulatory measures."
For example, the European Union's "Digital Markets Act" emphasizes "fair, reasonable, and non-discriminatory" conditions for platform access, but the concepts of "fair" and "reasonable" remain vague and unmeasurable. "Can we design good measuring rules to constrain the fees that platforms charge to merchants?" Professor Tirole's question sparked deep thinking among the faculty and students present.
One key concept in his report is the "zero lower bound." This means that the pricing of digital products has a minimum price of zero because "negative prices" or subsidies could induce user arbitrage. This leads to efficiency problems. Many platforms and businesses currently offer free access to consumers, while platforms and businesses attract customers, earning additional revenue through advertising, data information, and other benefits. By categorizing merchants joining the platform into platform-owned merchants and third-party merchants and employing a simple mathematical model, Professor Tirole analyzed the impact of different access charge conditions on both types of merchants and the entire digital ecosystem of the platform.
When access charges are below ancillary benefits, the opportunity cost is negative, leading to platform-owned merchants being suppressed by third-party merchants. This could result in the platform intentionally lowering the ranking of third-party merchant products while boosting the ranking of its own products. When access charges are higher than ancillary benefits, the prices of products from third-party merchants increase, leading to fewer consumers choosing products from third-party merchants. Simultaneously, the platform itself has to lower consumer prices to retain consumers.
"Therefore, in a digital ecosystem, the ideal scenario is when platform access charges are balanced with ancillary benefits for both platform-owned merchants and third-party merchants. This is the most likely situation to stimulate business creativity and provide consumers with the most choices," Tirole explained.
