The Effects of Commensurability and Expertise on Economic Value: The Case of Platform Organizations



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How market actors determine value has been a fundamental question since the early years of our economic history. Researchers across different disciplines have shed light on key aspects of valuation processes yet it is not very clear how reference points against which actors compare goods are formed and impact economic value. Drawing mainly from sociological theories of value and institutional theory, I examine the role of platform organizations in the valuation of a particular type of good called experience goods. Platforms are defined as organizations that control direct exchanges among actors (i.e., Google, Apple, newspapers, universities). This way of organizing exchanges is becoming pervasive thanks to the explosion of the internet and overall global connectivity. Information economists define experience goods as those that require a direct experience to judge their quality level (i.e., wine, movies, and restaurants, among others). I propose that among other characteristics, platform organizations develop two specific dynamics that are fundamental for economic exchanges to become self-reproducing and therefore to create markets. These two dynamics refer to the capacity that platform organizations have to develop valuation frameworks and their capacity to increase participants’ levels of expertise through platform participation.

To advance knowledge on goods valuation and the creation of stable and self-reproducing economic exchanges through the creation of a platform, I analyze the role of a particular platform organization created to exchange a specific experience good: specialty or gourmet coffee. I utilize the information from coffee competitions and e-auctions of some of the finest and most unique coffees in the world. I analyze this information using mixed-effects and generalized least squares models accounting for country and year to gauge the proposed mediator effect of commensurability and the moderator effect of buyer’s level of expertise about the platform.

The results generally support the hypotheses here developed. I found that platform-designated qualifiers partially mediated direct relationships between goods’ characteristics and economic exchange value. The effect of tenure of the platform was also positive and significant. Although the interaction effects of contextual variables were significant, their interpretation was less clear. Finally, the interaction effect of buyer’s level of expertise about the platform was significant and positive.

I make four contributions. First, I add insights to the perspective that valuation in markets is a fundamental process of social and economic organization. In particular, I show how at the organization level sellers and buyers can interact following certain established rules by a neutral organization so that socio-cognitive devices that situate the different products in relation to one another can be established. Second, this dissertation studies the case of platforms as mechanisms that establish systems of valuation and create spaces in which market actors can increase their expertise; two roles that have not received much attention in the literature on platforms. Third, this dissertation examines the influence of broader contextual forces such as the importance at the country level of the particular product transacted in the platform. My fourth and final contribution refers to a better understanding of product qualification processes using the case of coffee as an experience product. I show that the platform is providing the common framework so that both sellers and buyers compare and hence qualified products exchanged in the platform.



Economic value, Platforms, Coffee, Market creation