The Economics of Platforms


Book Description

Digital platforms controlled by Alibaba, Alphabet, Amazon, Facebook, Netflix, Tencent and Uber have transformed not only the ways we do business, but also the very nature of people's everyday lives. It is of vital importance that we understand the economic principles governing how these platforms operate. This book explains the driving forces behind any platform business with a focus on network effects. The authors use short case studies and real-world applications to explain key concepts such as how platforms manage network effects and which price and non-price strategies they choose. This self-contained text is the first to offer a systematic and formalized account of what platforms are and how they operate, concisely incorporating path-breaking insights in economics over the last twenty years.




Market definition and market power in the platform economy


Book Description

With the rise of digital platforms and the natural tendency of markets involving platforms to become concentrated, competition authorities and courts are more frequently in a position to investigate and decide merger and abuse cases that involve platforms. This report provides guidance on how to define markets and on how to assess market power when dealing with two-sided platforms. DEFINITION Competition authorities and courts are well advised to uniformly use a multi-markets approach when defining markets in the context of two-sided platforms. The multi-markets approach is the more flexible instrument compared to the competing single-market approach that defines a single market for both sides of a platform, as the former naturally accounts for different substitution possibilities by the user groups on the two sides of the platform. While one might think of conditions under which a single-market approach could be feasible, the necessary conditions are so severe that it would only be applicable under rare circumstances. To fully appreciate business activities in platform markets from a competition law point of view, and to do justice to competition law’s purpose, which is to protect consumer welfare, the legal concept of a “market” should not be interpreted as requiring a price to be paid by one party to the other. It is not sufficient to consider the activities on the “unpaid side” of the platform only indirectly by way of including them in the competition law analysis of the “paid side” of the platform. Such an approach would exclude certain activities and ensuing positive or negative effects on consumer welfare altogether from the radar of competition law. Instead, competition practice should recognize straightforwardly that there can be “markets” for products offered free of charge, i.e. without monetary consideration by those who receive the product. ASSESSMENT The application of competition law often requires an assessment of market power. Using market shares as indicators of market power, in addition to all the difficulties in standard markets, raises further issues for two-sided platforms. When calculating revenue shares, the only reasonable option is to use the sum of revenues on all sides of the platform. Then, such shares should not be interpreted as market shares as they are aggregated over two interdependent markets. Large revenue shares appear to be a meaningful indicator of market power if all undertakings under consideration serve the same sides. However, they are often not meaningful if undertakings active in the relevant markets follow different business models. Given potentially strong cross-group external effects, market shares are less apt in the context of two-sided platforms to indicate market power (or the lack of it). Barriers to entry are at the core of persistent market power and, thus, the entrenchment of incumbent platforms. They deserve careful examination by competition authorities. Barriers to entry may arise due to users’ coordination failure in the presence of network effect. On two-sided platforms, users on both sides of the market have to coordinate their expectations. Barriers to entry are more likely to be present if an industry does not attract new users and if it does not undergo major technological change. Switching costs and network effects may go hand in hand: consumer switching costs sometimes depend on the number of platform users and, in this case, barriers to entry from consumer switching costs increase with platform size. Since market power is related to barriers to entry, the absence of entry attempts may be seen as an indication of market power. However, entry threats may arise from firms offering quite different services, as long as they provide a new home for users’ attention and needs.




The Keystone Advantage


Book Description

Today, many companies operate within a complex network of firms that all depend on each other for success. In this book, authors Marco Iansiti and Roy Levien use the powerful example of biological ecosystems to show how companies can leverage these emerging business networks for long-term success. The book's title, "The Keystone Advantage", is taken directly from biology - it refers to "keystone species", which proactively maintain the healthy functioning of their entire ecosystem for a simple reason: their own survival depends on it. In the same way, say the authors, companies can protect and ensure their own success by deliberately fostering the combined health of the network they operate in.




Handbook of the Economics of Art and Culture


Book Description

This volume emphasizes the economic aspects of art and culture, a relatively new field that poses inherent problems for economics, with its quantitative concepts and tools. Building bridges across disciplines such as management, art history, art philosophy, sociology, and law, editors Victor Ginsburgh and David Throsby assemble chapters that yield new perspectives on the supply and demand for artistic services, the contribution of the arts sector to the economy, and the roles that public policies play. With its focus on culture rather than the arts, Ginsburgh and Throsby bring new clarity and definition to this rapidly growing area. - Presents coherent summaries of major research in art and culture, a field that is inherently difficult to characterize with finance tools and concepts - Offers a rigorous description that avoids common problems associated with art and culture scholarship - Makes details about the economics of art and culture accessible to scholars in fields outside economics




Digital Competition Law in Europe


Book Description

‘Digital competition’, a term and concept that has risen to the forefront of competition law, may be viewed as both promising and cautionary: on the one hand, it brings the promises of increased speed, efficiency and objectivity, and, on the other, it entails potential pitfalls such as hard-to-identify pathways to unfair pricing, dominant positions and their potential abuse, restriction of choice and abuse of personal data. Accordingly, jurisdictions around the world are taking measures to deal with the phenomenon. In this concise but thoroughly researched book – both informative and practical – lawyers from two prominent firms with specialised digital competition teams take stock and examine the state of digital competition in the enforcement practices of six competition authorities in Europe, most of these forerunners in the field of digital competition policy and enforcement. The competition authorities surveyed are those of the European Union, the United Kingdom, France, Germany, the Netherlands and Belgium. For each, an overview, spanning the period from 2012 to mid-2022 but including as many landmark cases as possible up to and including December 2022, includes not only landmark cases in which digital technologies have had a significant impact on the competition law outcome but also guidance documents such as speeches, policy statements, industry surveys and research reports. Activities and enforcement practices of the various authorities include the following and more: degree of activity; focus of the activity; enforcement styles; enforcement instruments; visible effectiveness of enforcement; and important insights and outlooks. Each overview contains separate chapters on cartel prohibition, the prohibition of abuse of a dominant position and merger control. Additional chapters – partially written by guest authors (who are all without a doubt true thought leaders: Tristan Byrne, Giuseppe Colangelo, Ai Deng, Teodora Groza, Daniel Mândrescu, Wolf Sauter, Thibault Schrépel, and Gareth Shier) – evaluate the similarities and differences in the enforcement practices and the positive and negative effects of digital competition in the jurisdictions investigated, the economic context, the most important game changers, and a concluding chapter offers recommendations. An indispensable guide to quickly and accessibly acquiring in-depth knowledge of competition law in the digital sector, this matchless volume is a must-read for any practitioner or academic who encounters competition law related to digital markets. The dilemmas and challenges of the new competition law reality – which is here already, like it or not – are clearly explained here for the benefit of regulators, academics, policymakers, judges, in-house counsel and lawyers specialising in competition law and intellectual property law.




EU Competition Law and the Information and Communication Technology Network Industries


Book Description

Competition policies have long been based on a scholarly tradition focused on static models and static analysis of industrial organisation. However, recent developments in industrial organisation literature have led to significant advances, moving beyond traditional static models and a preoccupation with price competition, to consider the organisation of industries in a dynamic context. This is especially important in the field of information and communication technology (ICT) network industries where competition centres on network effects, innovation and intellectual property rights, and where the key driver of consumer benefit is technological progress. Consequently, when an antitrust intervention is contemplated, a number of considerations that arise out of the specific nature of the ICT sector have to be taken into account to ensure improved consumer welfare. This book considers the adequacy of existing EU competition policy in the area of the ICT industries in the light of the findings of modern economic theory. Particular attention is given to the implications of these dynamic markets for the competitive assessment and treatment of the most common competitive harms in this area, such as non-price predatory practices, tying and bundling, co-operative standard setting, platform joint ventures and co-operative R&D.




Competition Law and Big Data


Book Description

In this timely book, Beata Mäihäniemi analyses and evaluates how the characteristics of information as a good, as well as the characteristics of digital platforms, affect the application of competition law in both theory and practice.




Virtual Competition


Book Description

“A fascinating book about how platform internet companies (Amazon, Facebook, and so on) are changing the norms of economic competition.” —Fast Company Shoppers with a bargain-hunting impulse and internet access can find a universe of products at their fingertips. But is there a dark side to internet commerce? This thought-provoking exposé invites us to explore how sophisticated algorithms and data-crunching are changing the nature of market competition, and not always for the better. Introducing into the policy lexicon terms such as algorithmic collusion, behavioral discrimination, and super-platforms, Ariel Ezrachi and Maurice E. Stucke explore the resulting impact on competition, our democratic ideals, our wallets, and our well-being. “We owe the authors our deep gratitude for anticipating and explaining the consequences of living in a world in which black boxes collude and leave no trails behind. They make it clear that in a world of big data and algorithmic pricing, consumers are outgunned and antitrust laws are outdated, especially in the United States.” —Science “A convincing argument that there can be a darker side to the growth of digital commerce. The replacement of the invisible hand of competition by the digitized hand of internet commerce can give rise to anticompetitive behavior that the competition authorities are ill equipped to deal with.” —Burton G. Malkiel, Wall Street Journal “A convincing case for the need to rethink competition law to cope with algorithmic capitalism’s potential for malfeasance.” —John Naughton, The Observer




Digital markets and online platforms: new perspectives on regulation and competition law


Book Description

Across the world, regulators and policy makers are grappling with how to establish a competitive, safe and fair online environment that also safeguards users’ fundamental rights as citizens. Ahead of the European Commission’s Digital Markets Act (DMA), this book “Digital markets and online platforms: new perspectives on regulation and competition law“, presents CERRE’s latest contribution to the debate with concrete policy recommendations. Together, the policy recommendations in this book present a roadmap that should be pursued for EU policy makers to safeguard competition and innovation in digital platform markets. They can be organised into three key areas for action: (i) More effective enforcement, (ii) increased transparency and switching easiness, and (iii) providing access to key innovation capabilities. “The need to safeguard fair and vibrant competition, which is also seen as an important driving factor for innovation, is nothing new for policy makers. However, the characteristics and complexities of digital markets have challenged some of the traditional approaches.” – Jan Krämer, editor of the book and CERRE Academic Co-Director The book’s recommendations highlight that platform transparency and associated data collection by authorities, as well as data sharing by platforms (initiated through consumers or authorities), are the two most important overarching policy measures for platform markets in the near future. They facilitate enforcement, consumer choice, and innovation capabilities in the digital economy. The contents of this book were presented and debated during a CERRE live debate with guest speakers Anne Yvrande-Billon (Arcep’s Director of Economic, Market and Digital Affairs), MEP Stéphanie Yon-Courtin (Vice-President of the European Parliament’s Committee on Economic and Monetary Affairs) and Javier Espinoza (Financial Times’ EU Correspondent covering competition and digital policy).




Digitalization Across Organizational Levels


Book Description

This book covers a broad range of topics related to digitalization. Specifically, it views digitalization across different organizational levels, such as the level of individuals, teams, processes, firms, and ecosystems. It includes a collection of recent research and reflections on the topic that helps to understand the technological foundations of digitalization and its impacts. It also reflects on the process of digitalization and how it changes established ways of working, collaborating, and coordinating. With this book, the editors and authors honor Professor Dr. Armin Heinzl for his enormous and ongoing contributions to information systems research, education, and practice.