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The tools and techniques of revenue management, which have been refined by decades of research and real-world stress testing, can help greatly with this task but typically need lots of data to run well. They also benefit from being applied across lots of supp;y and lots of demand. In other words, they work better and better across bigger and bigger networks, and network effects are on e of the defining characteristics of platforms. So, an exercise studio gains access to powerful yield management algorithms that let it maximize total revenue for each class. Airbnb hosts get pricing assistance so that their lodging is rented for the revenue-maximizing price during both busy and quiet periods. Uber drivers get “heat maps” showing them where to position themselves to maximize their chances of quickly getting a fare. Mathematically sophisticated, data-rich services like these used to be out of reach for many real-world businesses, especially small ones. thanks to the free, perfect, and instant economies of bits, they’re now available everywhere O2O platforms are.
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- Harnessing Our Digital Future, Machine Platform Crowd by Andrew McAfee and Erik Brynjolfsson