Market Behavior on the Digital Platform

Abstract

This paper seeks to develop the theoretical foundation to explain market behavior on the digital platform. To achieve this purpose, the theory of market equilibrium is extended to include both production equilibrium and consumption equilibrium that helps explain the price and the value of a commodity in the market. From this base, the concept of economic surplus is reformulated and market behavior is examined on the digital platform. Findings from this paper reveal that individual behaviors with rational choice are directed towards the production equilibrium or the consumption equilibrium, but the ultimate decisions are relied upon cooperative behaviors towards the status of market equilibrium. This, in turn, provides theoretical foundations to explain market behavior on the digital platform, in which market equilibrium and economic surplus are conducted in the related markets of free goods, advertising services, and economic goods.