The potential of entry barriers in the context of digitalization
https://doi.org/10.38050/01300105202116
Abstract
The article analyzes the practical aspects of the functioning of some barriers to entry in the era of digital transformation of industry markets. It is noted that under the influence of digitalization processes, both positive changes in the mechanism of market operation are recorded, as well as a number of negative circumstances that have become a serious challenge for antitrust agencies. Control of big data, initial investment in digital infrastructure, and broad technological capabilities of digital blocking of users, against the background of powerful network effects and pronounced economies of scale, carry the potential for significant growth in the market power of individual firms. The article substantiates that such trends theoretically pose a significant threat to competition, and can form new types of entry barriers. At the same time, practical arguments are presented that indicate the ambiguity of this position.
References
1. Mesropyan, V. (2018). Digital platforms — the new market power. Faculty of Economics of Lomonosov Moscow State University. Official website. https://www.econ.msu.ru/sys/raw.php?o=46781&p=attachment (accessed 12.05.2020)
2. Sokolovskaya, E. (2019). Is Russian software out of competition? Competition and Law, 6. https://cljournal.ru/glavnoe/263/ (accessed 08.05.2020)
3. Transformation of antimonopoly legislation and law enforcement practice in the digital economy era. Round table of the Association of Antimonopoly Experts (2018). Russian Journal of Competition Law and Economics, 3 (15), 74–79.
4. Shastitko, A., & Markova, O. (2020). An old friend is better than two new ones? Approaches to market research in the context of digital transformation for the antitrust laws enforcement. Voprosy Ekonomiki, 6, 37—55. https://doi.org/10.32609/0042-8736-2020-6-37-55
5. Shastitko, A., et al. (2019). Competition and competition policy: at the intersection of the future and the past. Izdatel’skij Dom Delo, RANEPA.
6. Carikovskij, A. Yu. et al., (2018). Antitrust regulation in the digital age. How to protect competition in the context of globalization and the Fourth Industrial Revolution. HSE Publishing House — HSE University. doi: 10.17323/978-5-7598-1750-5
7. Digital Russia: a new reality (2017). Report of the Digital McKinsey expert group. https://www.mckinsey.com/ru/~/media/McKinsey/Locations/Europe%20and%20Middle%20East/Russia/Our%20Insights/Digital%20Russia/Digital-Russia-report.pdf (accessed 12.05.2020).
8. Yusupova, G. (2016). FAS vs Google: Economic Analysis. Economic policy. 11(6), 82–99.
9. Auer, D., Manne, G., Portuese, A., & Schrep, T. (2018). Why sound law and economics should guide competition policy in the digital economy. Contribution of ICLE to the European Commission’s inquiry on «shaping competition policy in the era of digitisation». International Center for Law & Economics. Дата обращения 29.04.2020, https://ec.europa.eu/competition/information/digitisation_2018/contributions/international_center_for_law_and_economics.pdf
10. Colin, N., Landier, A., Mohnen, P., & Perrot, A. (2015). The Digital Economy. Notes du conseild’analyseéconomique, 7(26).
11. Currier, J. (2018). The Network Effects Manual: 13 Different Network Effects (and counting). NFX Venture Firm. Дата обращения 10.05.2020, https://www.nfx.com/post/networkeffects-manual/
12. COFECE (2018). Rethinking Competition in the Digital Economy. Mexico Federal Economic Competition Commission: official site. Дата обращения 03.05.2020, https://www.cofece.mx/wp-content/uploads/2018/03/EC-EconomiaDigital_web_ENG_letter.pdf
13. Dube, J. H., Hitsch, G. J., & Chintagunta, Pr. K. (2008). Tipping and Concentration in Markets with Indirect Network Effects. Chicago GSB Research Paper.(8). Дата обращения 07.05.2020, https://marketing.wharton.upenn.edu/wpcontent/uploads/2016/10/tipping_indirect_network_effects_09_97.pdf
14. Duch-Brown, N. (April 2017). The Competitive Landscape of Online Platforms. JRC Digital Economy Working Paper. Дата обращения 01.05.2020, https://ec.europa.eu/jrc/sites/jrcsh/files/jrc106299.pdf
15. Evans, D., & Schmalensee, R. (2017, August). Network Effects: March to the Evidence, Not to the Slogans. Forthcoming, Antitrust Chronicle. Дата обращения 30.04.2020, https://mitsloan.mit.edu/shared/ods/documents/?PublicationDocumentID=4243
16. Evans, D., & Schmalensee, R. (2007). The Industrial Organization of Markets with Twosided Platforms. Competition Policy International, 3 (1),151–179.
17. Gold, A., & Hogendorn, C. (2016). Tipping in Two-Sided Markets with Asymmetric Platforms. Economic Analysis and Policy, vol. 50, 85–90.
18. Hagiu, A., & Rothman, S. (2016, April). Network Effects Aren’t Enough. Harvard business review. Дата обращения 02.05.2020, https://hbr.org/2016/04/network-effects-arent-enough
19. Katz, M., & Shapiro, C. (1994). Systems Competition and Network Effects. The Journal of Economic Perspectives, 2 (8), 93–115.
20. Lerner, A. (2014, August 26). The Role of ‘Big Data’ in Online Platform Competition. Social Science Research Network. Дата обращения 17.05.2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2482780
21. MacCarthy, M. (2018, January). Big data is not a barrier to entry. Tech policy perspectives, CIO. Дата обращения 05.05.2020, https://www.cio.com/article/3252144/big-data-is-nota-barrier-to-entry.html
22. Mahnke, R. (2015). Big Data as a Barrier to Entry. Antitrust Chronicle. Competition Policy International, 12.
23. Newman, N. (2014). Search, Antitrust, and the Economics of the Control of User Data. Yale Journal on Regulation, 31, 401–454.
24. O’Сonnor, D. (2015, April). Is Big Data an Entry Barrier? What Tinder Can Tell Us. Disruptive Competition Project. Дата обращения 05.05.2020, http://www.project-disco.org/competition/040215-big-data-entry-barrier-tinder-can-tell-us/
25. OECD (2019). Implications of E-commerce for Competition Policy. Background Note. Directorate for financial and enterprise affairs. OECD official website. Дата обращения 05.05.2020, https://www.oecd.org/daf/competition/e-commerce-implications-forcompetition-policy.htm
26. OECD (2018, а). Rethinking Antitrust Tools for Multi-Sided Platforms. OECD official website. Дата обращения 28.04.2020, https://www.oecd.org/competition/rethinkingantitrust-tools-for-multi-sided-platforms.htm
27. OECD (2018, в). Maintaining competitive conditions in the era of digitalization. Report to G-20 Finance Ministers and Central Bank Governors. OECD official website. Дата обращения 28.04.2020, https://www.oecd.org/g20/Maintaining-competitive-conditions-in-era-ofdigitalisation-OECD.pdf
28. OECD (2016). Big data: Bringing competition policy to the digital era. OECD official site. Дата обращения 28.04.2020, https://www.oecd.org/competition/big-data-bringingcompetition-policy-to-the-digital-era.htm
29. Radinsky, K. (2015, March). Data monopolists like google are threatening the economy. Harvard business review. Дата обращения 07.05.2020. https://hbr.org/2015/03/datamonopolists-like-google-are-threatening-the-economy
30. Report Committee for the Study of Digital Platforms Market Structure and Antitrust Subcommittee (2019). George J. Stigler Center for the Study of the Economy and the State. Дата обращения 05.05.2020. https://www.judiciary.senate.gov/imo/media/doc/marketstructure-report%20-15-may-2019.pdf
31. Russia online? Catch up can not be left behind. Report. (2016). The Boston Consulting Group. Дата обращения 12.05.2020. https://image-src.bcg.com/Images/BCG-RussiaOnline_tcm27-152058.pdf
32. Sanghi, A. (2016). Сompetition in the digital economy:how to assess emerging tech markets? Lexis Nexis. Дата обращения 14.05.2020, https://competitionindia.files.wordpress.com/2016/02/competition-in-the-digital-economy-3thjan.pdf
33. Suleymanova, I., & Wey, C. (2011). Bertrand Competition in Markets with Network Effects and Switching Costs. The B. E. Journal of Economic Analysis &Policy, 11, (1/56), 1–12.
34. Werden, G. J. (2001). Network effects and conditions of entry: lessons from the microsoft case. Antitrust Law Journal, 1(69), 87–111.
35. Wong-Ervin, K. W. (2020, January 26). Assessing Monopoly Power or Dominance in Platform Markets. Social Science Research Network. Дата обращения 10.05.2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3525727
Review
For citations:
Zazdravnykh A.V. The potential of entry barriers in the context of digitalization. Moscow University Economics Bulletin. 2021;(1):128-147. (In Russ.) https://doi.org/10.38050/01300105202116
Views:
468
Email this article 