If you have the feeling that everything is more expensive than ever, it is not your imagination: it is called “Zillow effect”

Digital platforms promised to make everything easier and cheaper. Actually, they have created the opposite phenomenon: The “Zillow Effect” is taking practically everything What we play online, whether digital or not.

Why is it important. When any transaction is digitized, the demand is triggered because it eliminates friction, but the supply remains constant. The result is usually the same: prices go up and competition intensifies for buyers.

The panoramic. The effect began in the real estate sector with Zillow in the United States, A real estate platform born in 2006 which allowed anyone to consult the value of their home.

Now it extends to university candidates, employment searches, appointment applications, concert tickets, vacation destinations and even second -hand markets. If you can buy it with a click, it is probably more expensive than before.

In detail. The mechanism is simple:

• Before, requesting place at a university required physical effort. Get forms, send them by postal mail, go to pay fees.
• Now, with a button you can send your application to twenty universities.

Result: the best receive many more requests, they can be more selective and the competition to access goes up to the same pace that their access barriers are lowered to the application.

The same happens in the labor market:

For candidates, there is a paradox: getting a job becomes more complicated.

The contrast. There are two large categories of products here:

• Products with elastic offer. They are the ones that can be manufactured in greater quantities. Clothing, processed food, smartphones. They have been cheaper.
• Products with limited offer, or by regulation or by their own nature. Housing in good areas, places of universities, more desirable jobs, very attractive sexual couples. They have fisher, financially or symbolically.

Between the lines. Great technology benefit from this problem, so they have no incentive to solve this problem. More demand is equivalent to more data, more engagementmore commissions.

The case that gives name to this effect has a perfect example: Zillow earned money both if the houses were sold as if notbecause he charged for teaching them. AND Your platform fired your visibilitywith the aforementioned consequence: same supply, greater demand … upward prices.

The threat. The Zillow effect has as first victims local and imperfect markets where opportunities could be found before. There are no longer the secret restaurants, virgin and quiet holiday destinations, or jobs that only a few knew.

Google Maps, LinkedIn, Instagram or YouTube have democratized knowledge, but have also concentrated demand. An example: Instagram and ‘Tourism of Likes‘.

And now what. A possible solution would increase the offer where possible, such as building more housing or creating more university places. Another would artificially limit digital demand. But there are not too many incentives for it.

The digital world has connected us in this century, but it has also put us to compete against many more people for the same limited resources. And there is only a great winner: the platforms.

In Xataka | 34 futuristic predictions made in the past: erroneous, successful and crazy

Outstanding image | Xataka