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Showing 9 of 18 Publications by Nicolas Petit
Presentations & Interviews The denizens of Silicon Valley (and Seattle) have picked up a slew of nicknames: GAFA (for Google, Apple, Facebook, and Amazon); FAANG (add Netflix in . . .
The denizens of Silicon Valley (and Seattle) have picked up a slew of nicknames: GAFA (for Google, Apple, Facebook, and Amazon); FAANG (add Netflix in there); or, most ominously, the Frightful Five (sub out Netflix, sub in Microsoft). The central charge is these firms are monopolizing their respective markets, and have achieved such dominance that their market positions are now unchallengable. The side effects may include dampened innovation, reduced labor power, and any number of democracy-is-in-peril concerns.
ICLE Academic Affiliate Nicolas Petit joins the Political Economy Podcast to argue against this alarmist case against the tech titans. Drawing from his 2016 paper, “Technology Giants, the Moligopoly Hypothesis and Holistic Competition: A Primer,” as well as new research from a forthcoming book, Petit makes the argument these “Frightful Five” firms engage in cutthroat competition with one another, benefiting the economy as a whole — and government regulation against these companies is premature.
The full episode is embedded below.
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Popular Media With its $5 billion fine against Google, the European Commission (EC) just applied to the search giant an old U.S. political trick: gerrymandering; the idea that if antitrust watchdogs draw markets narrowly enough, every company can be made to look like an evil monopolist.
With its $5 billion fine against Google, the European Commission (EC) just applied to the search giant an old U.S. political trick: gerrymandering; the idea that if antitrust watchdogs draw markets narrowly enough, every company can be made to look like an evil monopolist.
Read the full piece here.
ICLE White Paper This paper looks at whether the standard unilateral effects model can be applied to non-price competition parameters such as innovation. This question arises because competition authorities are intervening in horizontal mergers that are found to give rise to a “significant impediment to effective innovation competition” (“SIEIC”) as a result of a reduction in post-merger R&D efforts (including lower expenditure).
This paper looks at whether the standard unilateral effects model can be applied to non-price competition parameters such as innovation. This question arises because competition authorities are intervening in horizontal mergers that are found to give rise to a “significant impediment to effective innovation competition” (“SIEIC”) as a result of a reduction in post-merger R&D efforts (including lower expenditure). SIEIC is distinct from the mainstream unilateral effects theory of harm that predicts a “significant impediment to effective competition” (“SIEC”) as a result of increased prices. Most recently, the European Commission (“Commission”) used its powers under the EU Merger Regulation (“EUMR”) to impose remedies in the Dow/DuPont merger. This was in part because of concerns that that the transaction “would be likely to significantly impede effective competition as regards innovation both in innovation spaces where the Parties’ lines of research and early pipeline products overlap and overall in innovation in the crop protection industry.” At the heart of the development of SIEIC analysis lies a fundamental question of competition theory: under what conditions can variations of existing economic models be applied in merger cases?
This paper is divided into three sections. In Section I, the SIEIC theory of harm is described and put into perspective against past competition policy on innovation competition. Section I concludes that SIEIC constitutes a small but significant change in merger policy. In Section II, the economics of SIEIC are discussed. In particular, it will be seen that SIEIC is an application of the standard unilateral effects analysis where the focus is shifted from price to innovation effects. Section II demonstrates that this variant of the model can only deliver sound and robust empirical predictions if three critical innovation-specific questions are addressed. Section III discusses the economic methodology of merger control policy. This Section shows that agencies should remain free to rely on new or adapted pre-existing economic models in merger control reviews, provided they are able to discharge the “burden of persuasion”. With this, the paper hopes to contribute to the ongoing development of optimal merger control policy in innovative and R&D-driven markets.
TOTM Regardless of the merits and soundness (or lack thereof) of this week’s European Commission Decision in the Google Shopping case — one cannot assess this . . .
Regardless of the merits and soundness (or lack thereof) of this week’s European Commission Decision in the Google Shopping case — one cannot assess this until we have the text of the decision — two comments really struck me during the press conference.
TOTM This symposium offers a good opportunity to look again into the complex relation between concentration and innovation in antitrust policy. Whilst the details of the . . .
This symposium offers a good opportunity to look again into the complex relation between concentration and innovation in antitrust policy. Whilst the details of the EC decision in Dow/Dupont remain unknown, the press release suggests that the issue of “incentives to innovate” was central to the review. Contrary to what had leaked in the antitrust press, the decision has apparently backed off from the introduction of a new “model”, and instead followed a more cautious approach. After a quick reminder of the conventional “appropriability v cannibalization” framework that drives merger analysis in innovation markets (1), I make two sets of hopefully innovative remarks on appropriability and IP rights (2) and on cannibalization in the ag-biotech sector (3).
TOTM Since Brussels has ordered Ireland to recover 13€ billion from Apple, much ink has been spilled on the European Commission’s (EC) alleged misuse of power and breach . . .
Since Brussels has ordered Ireland to recover 13€ billion from Apple, much ink has been spilled on the European Commission’s (EC) alleged misuse of power and breach of the “rule of law.” In the Irish Times, Professor Liza Lovdahl-Gormsen wrote that the EC has been “bending” competition law to pursue a corporate taxation agenda in disguise. Former European Commissioner Neelie Kroes went so far as to suggest that the EC was attempting to rewrite international tax rules.
TOTM In Brussels, the talk of the town is that the European Commission (“Commission”) is casting a new eye on the old antitrust conjecture that prophesizes . . .
In Brussels, the talk of the town is that the European Commission (“Commission”) is casting a new eye on the old antitrust conjecture that prophesizes a negative relationship between industry concentration and innovation. This issue arises in the context of the review of several mega-mergers in the pharmaceutical and AgTech (i.e., seed genomics, biochemicals, “precision farming,” etc.) industries.
ICLE White Paper Summary A novel theory of harm is crystalising in European Union (“EU”) merger control. Under this theory, the EU Commission (“Commission”) can intervene in mergers . . .
A novel theory of harm is crystalising in European Union (“EU”) merger control. Under this theory, the EU Commission (“Commission”) can intervene in mergers that it considers generally reduce innovation incentives in an industry as a whole. This theory of harm can be referred to as the Significant Impediment to Industry Innovation (“SIII”) theory. This policy paper first attempts to describe the content and extent of the SIII theory (I). Second, it shows that the SIII theory marks a departure from established EU merger control practice (II). Third, it discusses the economic foundations of the SIII theory (III). Finally, it puts forward best practices for the assessment of mergers in R&D intensive industries (IV). With this, the present paper hopes to assist in the development of sound merger control policy in innovative markets, and undermine crude conjectures on the relationship between market structure, patent statistics and industry innovation theory.
Continue reading the full paper.
Popular Media The award of the Nobel Prize in Economics to Professor Jean Tirole in 2014 has generated intense interest about his brainchild theory of two-sided markets. Against this background, this paper explores whether there is such a thing as a unified theory of two-sided markets and whether the two-sided markets literature can readily be applied by antitrust agencies, regulatory authorities and courts.
The award of the Nobel Prize in Economics to Professor Jean Tirole in 2014 has generated intense interest about his brainchild theory of two-sided markets. Against this background, this paper explores whether there is such a thing as a unified theory of two-sided markets and whether the two-sided markets literature can readily be applied by antitrust agencies, regulatory authorities and courts. This paper vindicates caution. The buzz surrounding two-sided markets could mask the fact that, in many cases, the policy implications of the theory are not yet clear, and that divergences among its proponents are often underplayed. In that regard, the paper notably stresses that one of the key conditions of market two-sidedness identified by Rochet and Tirole in their seminal paper of 2003 – the unavailability of Coasian bargaining between both sides of a platform – has often disappeared from subsequent scholarship. This omission threatens the coherent implementation of the theory of two-sided markets. Without this qualification, markets are often mischaracterized as two-sided, as soon as they display prima facie signs of indirect network externalities.
Read the entire piece here