Exercises: The Digital Revolution and 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.

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.

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 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 $\$100$ bags at half price every week for a year ($52$ weeks), and qualitatively assess the environmental impact avoided.

A city restricts tourist apartments because vacation rentals drive local residents out of the city center.

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

A foreign streaming platform generates 120 million pesos in annual subscriptions in Spain, but settles its activity through a low-tax European subsidiary via payments for "intellectual property royalties", paying an effective tax rate in Spain 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 % Corporate Income 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.