Search Results

Abstract

It is widely assumed that platform technology markets are inherently prone to converge on monopoly outcomes in which a single firm or a handful of firms enjoy market power due to a combination of network effects and switching costs. This assumption supports both proposed and enacted regulatory interventions that deploy competition law to place significant limitations on a wide range of practices by platform incumbents. In this paper, I revisit this market power assumption from theoretical and empirical perspectives. As a matter of theory, informed by selected real-world examples, I show that the conditions under which a platform incumbent can plausibly exercise market power are substantially more demanding than is commonly supposed. As a matter of empirics, I provide evidence from the food-delivery and cloud-computing markets, showing that widespread attributions of market power to leading platforms in these markets lack persuasive evidentiary support. Contrary to conventional wisdom, both theory and evidence cast significant doubt on the standard view that platform ecosystems are prone to converge on entrenched monopolies that justify preemptive intervention by competition regulators.

America is deeply polarized, increasingly split into two, roughly equal, political camps. Each side blames the other for causing the situation. In a speech last week, President Biden accused Republicans of being a threat to democracy itself.

Read the full piece here.

With just a week to go until the U.S. midterm elections, which potentially herald a change in control of one or both houses of Congress, speculation is mounting that congressional Democrats may seek to use the lame-duck session following the election to move one or more pieces of legislation targeting the so-called “Big Tech” companies.

Read the full piece here.

Price-parity clauses have, until recently, been little discussed in the academic vertical-price-restraints literature. Their growing importance, however, cannot be ignored, and common misconceptions around their use and implementation need to be addressed. While similar in nature to both resale price maintenance and most-favored-nations clauses, the special vertical relationship between sellers and the platform inherent in price-parity clauses leads to distinct economic outcomes. Additionally, with a growing number of lawsuits targeting their use in online platform economies, it is critical to fully understand the economic incentives and outcomes stemming from price-parity clauses.

Read the full piece here.

International Center for Law & Economics (ICLE) Director of Innovation Policy Kristian Stout was a guest on The Bob Harden Show to discuss the recent white paper he co-authored with ICLE President Geoffrey Manne about ways to reform Section 512 of the Copyright Act to ensure a better balance between providing legal certainty for online platforms and protecting creators’ rights. The full show is embedded below.

https://youtu.be/FO7rxb37XtA

ICLE Director of Competition Policy, Dirk Auer, joined TechFreedom’s Tech Policy Podcast to discuss why Europe has been pursuing aggressive antitrust enforcement against American tech companies. The full episode is embedded below.

Abstract

We study trade-offs faced by multiple-system operators (MSOs), the gatekeepers in the provision of internet service, when setting prices and quality for internet access and TV service. In response to improvements in over-the-top video (OTT), MSOs choose between accommodating OTT to share in the surplus it provides consumers, or steering consumers towards TV. We augment the standard mixed bundling model to show that in some cases MSOs have incentives to steer consumers towards TV, but that these incentives vary with the available pricing tools. We then estimate the distribution of model parameters using household panel data on subscription choices and internet usage. Our estimates imply that if MSOs can set different prices for different internet content, under many cost circumstances MSOs discount the OTT usage price. Furthermore, we find that the ability to charge prices based on internet usage strengthens the MSOs’ incentive to improve OTT quality.

Abstract

The well-known economic principle that “there is no such thing as a free lunch” (NFLP) has enjoyed a recent revival in the assessment of digital markets in antitrust. There is a belief that NFLP implies zero-price platform services must somehow be “paid for” by consumers in some manner—such as the loss of privacy and valuable data. Others have gone further, asserting that consumers are not only made worse off by the data collection and use that attend zero-price platform services, but that this state of affairs necessarily points to a lack of competitive alternatives. Both assertions are invalid, pressing the NFLP beyond the limits of logical inference. Inferences about who pays resource costs, and whether those payments reflect market power, are empirical questions as illuminated by other economic principles. Answers to such critical questions cannot be plucked from an NFLP magic hat.

Brrring! “Gee, this iPhone alarm is the worst—I should really change that sometime. Let’s see what’s in my calendar for today…”

Read the full piece here.