A Max. Average Transaction Size

A mandated Maximum Average Transaction Size (MATS) keeps markets focused on what people at the base of the economy have to sell. It is inevitably complex, but behind-the-scenes and unlikely to be of interest to users.

 

Operators of any online exchange have enormous leverage over which possible transactions are favored. In unregulated platforms, this is usually directed to encouraging the trades most profitable to operators. Witness for example the favoring of large sellers who generate disproportionate revenue by Etsy, eBay, or Amazon Marketplace.

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A formula for operators of POEMs (Public Official E-Markets) should create alternative incentives. This must, of course, be transparent so users can predict the motivations of operators. As an overarching aim, POEMs should aim to encourage small transactions. This is because those transactions are:

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• Inclusive: Small requirements can be met by small producers. This facilitates market entry, competition, and experimentation.

• Commercially Unattractive: Unfettered for-profit online markets constantly seek to grow their average transaction size to maximize revenue. A key aim of POEMs is serving markets that will be low priority for purely commercial operators.

• Restrictive of POEMs' scope: By driving operators to focus on small transactions, the platform's reach into the economy, and destabilization of alternative businesses, is reduced.