@article{202901,
  author = {Joseph Abadi and Markus K. Brunnermeier},
  title = {Token-Based Platform Governance},
  abstract = {<p>We develop a model to compare the governance of traditional shareholder-owned platforms to that of platforms that issue tokens. A traditional shareholder governance structure leads a platform to extract rents from its users. A platform that issues tokens for its services can mitigate this rent extraction, as rent extraction lowers the platform owners{\textquoteright} token seigniorage revenues. However, this mitigation from issuing {\textquotedblleft}service tokens{\textquotedblright} is effective only if the platform\&nbsp; can commit itself not to dilute the {\textquotedblleft}service token{\textquotedblright} subsequently. Issuing {\textquotedblleft}hybrid tokens{\textquotedblright} that bundle claims on the platform{\textquoteright}s services and its profits enhances efficiency even absent ex-ante commitment power. Finally, giving users the right to vote on platform policies, by contrast, redistributes surplus but does not necessarily enhance efficiency.</p>},
  year = {2024},
  journal = {Journal of Financial Economics},
  url = {https://authors.elsevier.com/c/1jt9~,6wzydh7C},
  language = {eng},
}