{
  "title": "Platform Precommitment via Decentralization",
  "publication": "IMF Working Papers, February 9, 2024",
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  "summary": "I study an entrepreneur’s incentives to build a decentralized platform using a blockchain. The entrepreneur can either build the platform using a regular company and retain control of the platform, or build the platform using a blockchain and surrender control of the platform.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- The paper studies an entrepreneur’s incentives to build a decentralized platform using a blockchain versus building the platform using a regular company and retaining control.\n- In both implementations, the platform’s users experience a locked-in effect.\n- Main theoretical result: a decentralized implementation is both (i) more profitable for the entrepreneur and (ii) a Pareto improvement, if and only if the size of the locked-in effect exceeds some threshold.\n- The paper also finds that progressive decentralization through airdrops can be optimal."
    },
    {
      "heading": "Key Findings and Results",
      "content": "- Entrepreneur’s strategic choice: retain control via a regular company OR surrender control via blockchain-based decentralization.\n- Locked-in effect: present under either implementation and critical to comparative outcomes.\n- Comparative criterion:\n  - Decentralized implementation is more profitable for the entrepreneur and a Pareto improvement if and only if the locked-in effect exceeds a threshold.\n- Mechanism design insight:\n  - Progressive decentralization (e.g., via airdrops) can be an optimal strategy."
    },
    {
      "heading": "Subjects and Keywords",
      "content": "- Subject: Blockchain and DLT, Labor, Revenue sharing, Self-employment, Taxes, Technology\n- Keywords: blockchain, Blockchain and DLT, commitment, cryptocurrency, decentralization, decentralized governance, decentralized platform, entrepreneur keep, entrepreneur's incentive, platform's user, platforms, Revenue sharing, Self-employment, smart contracts\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2024/02/09/platform-precommitment-via-decentralization-544468"
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    "Authors: Marco Reuter",
    "Published: February 9, 2024",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400267284.001",
    "The paper studies an entrepreneur’s incentives to build a decentralized platform using a blockchain versus building the platform using a regular company and retaining control.",
    "In both implementations, the platform’s users experience a locked-in effect.",
    "Main theoretical result: a decentralized implementation is both (i) more profitable for the entrepreneur and (ii) a Pareto improvement, if and only if the size of the locked-in effect exceeds some threshold.",
    "The paper also finds that progressive decentralization through airdrops can be optimal.",
    "Entrepreneur’s strategic choice: retain control via a regular company OR surrender control via blockchain-based decentralization.",
    "Locked-in effect: present under either implementation and critical to comparative outcomes.",
    "Comparative criterion:",
    "Mechanism design insight:",
    "Subject: Blockchain and DLT, Labor, Revenue sharing, Self-employment, Taxes, Technology",
    "Keywords: blockchain, Blockchain and DLT, commitment, cryptocurrency, decentralization, decentralized governance, decentralized platform, entrepreneur keep, entrepreneur's incentive, platform's user, platforms, Revenue sharing, Self-employment, smart contracts",
    "**Working Paper**"
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