On the Determinants of Platform Boundary: A Study from the Perspective of Transaction Cost Theory

In the digital economy era, the rapid expansion of internet platforms has resulted in highly concentrated market structures in online markets, thereby eliciting intensified scrutiny from regulatory authorities. In this paper, we aim to explore the key factors that shape the boundaries of platform firms by extending the transaction cost theory. We first define the boundaries of platform enterprises and provide specific measurement methods for their boundaries. By analyzing the distinctions between platform enterprises and manufacturing firms, we adapt the classical transaction cost theory to identify the key determinants of platform enterprise boundaries across three dimensions: data assets and digital technology, network effects, and organizational models. Finally, we offer policy recommendations to foster the healthy development of the platform economy based on our theoretical analysis. Our study highlights the critical role of platform boundary decisions within the framework of crowd science, as they fundamentally shape how diverse smart entities are coordinated on the platform to impact resource allocation efficiency and market stability.