The Digital Revolution and the New Economies

Explain what the sharing economy is and give three examples of platforms or services that represent it, stating which underutilised resource each one makes use of.

What is a digital platform and how does it differ from a traditional shop? Explain the idea of a "two-sided market" with an example (an app that connects people offering accommodation with people looking for it): what does the platform gain by putting them in touch?

A delivery app charges restaurants a $20\ \%$ commission per order, and the average order is $\text{€}\ 25$.

1. a) Calculate how much the app charges per order and how much per year if it handles $100,000$ orders.
2. b) Analyse what options a restaurant has when faced with that commission (raising prices, leaving, negotiating) and what each one depends on.

A city restricts tourist apartments because holiday rentals drive local residents out of the city centre.

1. a) Analyse the conflict using the concepts of this unit: sharing economy, housing market, and external effects on the neighbourhood.
2. b) Design a balanced regulation and defend its criteria.

What is platform work (gigs through an app) and how does it differ from a traditional job? Compare the timetable, contract, pay and social protection of an app delivery rider and of an employed waiter.

A delivery platform provides flexible work to thousands of riders, but many lack a stable contract and social protection.

1. a) Analyse the advantages and disadvantages of this model for the worker, the company, and the customers.
2. b) How do you evaluate a law that obliges companies to convert them into salaried employees? Reason your answer.

A warehouse automates its lines: packing jobs disappear, and maintenance technician and programmer roles emerge.

1. a) Analyse the net effect on employment and on the type of qualification demanded.
2. b) What educational policies should accompany automation? Reason your answer.

A food delivery app manages its delivery riders using an algorithm that combines order acceptance rate, route speed, and customer ratings. If a rider rejects orders during a stormy night, their reliability score drops by 15 %, which the algorithm automatically translates into priority shift allocation to other riders over the following two weeks, with no way to contact any human supervisor.

1. a) Identify the market failures present in this relationship (information asymmetry and principal-agent problem) and justify how the algorithm transfers the firm's operational risk directly to the worker.
2. b) The company argues that the algorithm is "objective, neutral, and does not discriminate" because it processes quantitative data. Demonstrate through a specific case how this automated system can generate indirect discrimination or unfair penalties against vulnerable groups.
3. c) Design three technical and organizational requirements of "algorithmic governance" that the labour authority should demand from the company to guarantee labour rights without preventing the operational efficiency provided by technology. Justify the economic impact of each requirement.

A textile industrial plant with 200 workers (average labour cost: €30,000 per year per worker) plans to replace 40 % of the workforce by introducing robots whose depreciation and maintenance cost is €12,000 per year per installed machine. In response to this process, a parliamentary group proposes introducing a "robot tax" of €15,000 per year per machine to fund unemployment benefits and training for the displaced workers.

1. a) Predict the impact of this tax on: 1) the factory's foreign competitiveness if competitors in other countries do not face this levy, 2) the incentive to invest in long-term productivity, and 3) sales prices for final consumers.
2. b) Demonstrate the technical difficulties of implementing this tax: why is it economically arbitrary and problematic to define the tax base of "a robot" compared to accounting management software, an ATM, or a logistics optimization algorithm?
3. c) Design an alternative fiscal or employment policy that raises resources for the labour transition of displaced workers without selectively taxing productive capital or penalising digitalization. Defend its economic viability.

The figure compares the linear model (extract, produce, use, throw away) with the circular economy model.

1. a) Explain in your own words the difference between both models.
2. b) Give an example of a company or product that follows the circular model and explain which part of the cycle it operates in.

Define ecological (or green) economics and explain how it differs from "business as usual" growth combined with occasional environmental measures.

What is planned obsolescence (products designed to last a short time or become unusable)? Give an example (a printer that stops working, a phone with no more updates) and explain its relationship with the linear economic model of "use and throw away".

Order these options for an old phone from most to least environmentally desirable: recycle it, throw it in the general waste bin, repair it and keep using it, sell it second-hand. Justify the order with the waste hierarchy (reduce, reuse, recycle).

A supermarket sells, via an app, bags of food close to its expiry date at half price, which it previously used to throw away.

1. a) Analyse the case as an example of circular economy and digital platform.
2. b) Calculate the savings of a family buying two $\text{€}\ 5$ bags at half price every week for a year ($52$ weeks), and qualitatively assess the environmental impact avoided.

An online shop sells refurbished phones $40\ \%$ cheaper than new ones, checked and with a one-year warranty.

1. a) What circular business model is this and what role does it play in the product's life cycle?
2. b) What barriers does it face (distrust of used goods, the fashion for brand-new, doubts about the warranty) and how does the company overcome them? Propose two specific actions.

A household appliance manufacturer estimates that producing a washing machine with a traditional linear design (designed to fail after 6 years with welded, non-detachable components) costs 180 € and sells for 350 €. Manufacturing a circular model (modular, repairable, with spare parts guaranteed for 15 years, and returned to the manufacturer at the end of its useful life) costs 280 € and requires an initial selling price of 530 €. Only 4 % of buyers choose the circular model.

1. a) Interpret why the free market favors the linear model: analyze the market failure caused by uninternalized negative externalities (waste and pollution) and consumer intertemporal myopia (discount rate on the purchase price versus the total life-cycle cost).
2. b) Predict the impact on sales of both models if the public sector implements two simultaneous measures: 1) a reduction in the VAT rate from 21 % to 4 % on repair services and spare parts, and 2) a 100 € upstream environmental fee on appliances that do not pass an official repairability index. Explain your prediction using the concept of cross-price elasticity.
3. c) Design a "pay-per-use" business model (servitization) for this manufacturer (selling "wash cycles" instead of selling physical ownership of the washing machine). Justify why this contractual shift automatically aligns the company's economic incentives with product durability and waste reduction.

"If a service is free, you are the product." Explain what that phrase means applied to a free social network: what do users really pay with (data, attention), who buys that "product" and what do they use it for?

Almost all your friends use the same social network and, even if a better one comes along, nobody switches: what is the point of being where nobody is?

1. a) Explain what the network effect is (the value of the service grows with the number of users).
2. b) Reason why the network effect leads to "winner-takes-most" markets and what competition problem it poses.
3. c) What could a regulator or a new competitor do to enter that market? Propose an idea.

The price of a flight changes every time you look at it: it rises if few seats are left, if the date is approaching or if you have already searched for it several times.

1. a) What information does the dynamic pricing algorithm use and what goal does it have for the airline?
2. b) Is it a form of price discrimination? Reason when you consider it legitimate (flights, hotels) and when abusive (basic goods, emergencies).
3. c) What limits or transparency would you demand from these algorithms?

A city council enters into an agreement with a tech company to deploy sensors on streetlights, waste containers, and public transport: the multinational assumes the costs and optimizes traffic light systems and energy consumption (which drops by 30 %), but the contract grants it exclusive ownership and commercial exploitation of the data generated by the mobility and habits of citizens.

1. a) Classify public street lighting and traffic management services using the concepts of rivalry and excludability (types of goods), and analyze whether the mass transfer of citizens' data to a private actor constitutes a negative externality or a loss of collective welfare that justifies public intervention.
2. b) From the perspective of competition policy, justify what unfair competitive advantages and what barriers to entry the tech company consolidates against local SMEs if it appropriates data as an essential facility.
3. c) Design three economic and regulatory governance clauses that the city council should include in the contract to preserve the public interest (analyze aspects such as public data ownership, anonymization protocols, and open access in an open format for third parties). Justify the economic rationale of each clause.

A law firm brings in an AI tool that reviews contracts in minutes: hours of interns' work disappear and demand grows for lawyers who interpret, negotiate and deal with clients.

1. a) Analyse which tasks the AI replaces and which human capabilities it revalues (judgement, personal dealing, responsibility).
2. b) What risk of wage polarisation is there between those who complement the AI and those who compete with it? Reason your answer.
3. c) As a Leaving Certificate student, which skills would be worth cultivating for this scenario? Justify your answer.

A foreign streaming platform generates 120 million euros in annual subscriptions in Ireland, but settles its activity through a low-tax European subsidiary via payments for "intellectual property royalties", paying an effective tax rate in Ireland of less than 1 % on its gross revenues. In contrast, a local audiovisual platform with a turnover of 10 million and a profit of 2 million pays a 25 % Corporation Tax rate, i.e. a tax bill of 0.5 million (5 % of its turnover).

1. a) Analyse this case from the principles of tax justice (ability to pay and horizontal and vertical equity). What distortion does it generate in competitive conditions compared to the local business fabric?
2. b) One government proposes a unilateral 3 % "digital tax" on the turnover of digital services of large companies; another prefers to join the global minimum 15 % Corporate Tax rate (OECD Pillar Two). Predict the economic incidence of each measure: who will ultimately bear the 3 % tax (firm or consumer) and what tax arbitrage problems does the minimum rate solve compared to the unilateral tax? Justify your answer using the concepts of elasticity and incentives.

Observe this apparent contradiction of the digital economy: the largest tech platforms concentrate a stock market value greater than the GDP of many advanced economies and earn profit margins of 25-30 %, while average aggregate productivity in Western economies grows at historically low rates (around 0.8 % annually).

1. a) Use the concepts of "network effects" (direct and indirect), "switching costs", and economies of scale to justify why digital markets endogenously tend toward "winner-take-all" structures instead of approximating perfect competition.
2. b) An analyst states: "Regulating large platforms will stifle innovation; the free market will spontaneously unseat any digital monopoly as soon as a better alternative emerges". Refute this statement by demonstrating which specific barriers to entry block the contestability of these markets, and predict what will happen to inequality in the functional distribution of income if the public sector does not intervene.

In an economy with 30 million adults, the relative poverty threshold is set at 800 € per month. There is a debate over replacing means-tested welfare benefits (such as the Minimum Vital Income) with an unconditional Universal Basic Income (UBI) of 800 € per month per person, financed through a restructuring of personal income tax (IRPF) with a single flat rate of 45 % starting from middle incomes.

1. a) Analyze the difference between both systems using the concept of the "poverty trap" or inactivity trap: why can a means-tested benefit discourage looking for formal part-time employment, whereas UBI theoretically eliminates this marginal disincentive?
2. b) Make a numerical estimate of the gross annual cost of this UBI (30 million adults × 800 € × 12 months) and compare it with an approximate total public revenue of 260,000 million euros. Based on this ratio, justify whether the debate over its implementation lies in an issue of net budgetary cost or in the distributive effects and labor incentives of the tax rate required to finance it.
3. c) A report warns that "UBI would cause a shortage in the labor supply for low-skilled and low-wage jobs". Predict, using the labor supply and demand model, how equilibrium wages and working conditions in these sectors would react if workers had this unconditional reservation income.

Topic Challenge. To what extent does your own household depend on digital globalization? Become an economic auditor and prepare a brief executive report following these phases:

1. Domestic audit: Record the last $10$ goods or services purchased in your home (clothing, technology, subscriptions, food). Classify in a table their geographical origin, the purchase channel (physical or digital platform), and the economic model involved (traditional, collaborative, or circular).

2. Comparison with real data: Check the latest "Information Society Statistics – Households" survey on the CSO website. Calculate the percentage of online purchases in your family sample and compare it with the national average (around $55.3\,\%$ of people who regularly shop online), explaining why the two indicators are not directly equivalent (purchases versus people) and what limits a sample of only $10$ data points.

3. Diagnosis and proposal: Write a reasoned analysis identifying two opportunities (e.g., lower prices, market access) and two risks (e.g., carbon footprint, precarious employment, or loss of local trade). Propose a specific and feasible measure to transition toward local consumption or a circular economy in your surroundings.

Assessment criteria:

• Thoroughness in household data collection and accuracy in the comparative calculation against CSO data.

• Conceptual clarity when connecting everyday consumption with digital platforms and globalization.

• Critical thinking when weighing socioeconomic opportunities and risks.

• Feasibility and economic rationale of the final proposal.