Modularity, Vertical Integration, and Open Access Policies:  Towards a Convergence of Antitrust and Regulation in the Internet Age

Farrell, Joseph; Weiser, Philip J.

doi:10.2139/ssrn.452220

Cited by 97 publications

(73 citation statements)

References 8 publications

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“…The \one monopoly rent theorem" that suggests B will choose an e cient policy (because having better complements makes its product more appealing) can fail for a range of reasons (such as price discrimination, see e.g., Farrell and Weiser 2003), even absent network e ects. But with indirect network e ects, vertical integration creates particular concerns if independent complementors can be important potential entrants, as Bresnahan and Greenstein (1999) argue in the computer industry (the trial court in the US Microsoft case echoed this logic with its proposed remedy of breaking up Microsoft into an operating system company and one that would initially sell applications, though the appeals court overturned this).…”

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confidence: 99%

Coordination and Lock-In: Competition with Switching Costs and Network Effects

2006

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PRELIMINARY DRAFT: PLEASE SEND COMMENTSKEYWORDS: switching costs, network e ects, lock-in, network externalities, co-ordination, indirect network e ects JEL CLASSIFICATIONS: L130 market structure, rm strategy and market performance: oligopoly and other imperfect markets; monopolistic competition; contestable markets L150 information and product quality; standardization and compatibility L120 market structure, rm strategy and market performance: monopoly L140 transactional relationships: contracts and reputation: networks D430 market structure and pricing: oligopoly and other forms of market imperfection D420 market structure and pricing: monopoly. ACKNOWLEDGMENTS: We're grateful to many friends and colleagues for numerous helpful suggestions and comments over several substantial rewrites of this paper since our rst 1997 draft. Special thanks are due to Alan Beggs, Simon AbstractSwitching costs and network e ects bind customers to vendors if products are incompatible, locking customers or even markets in to early choices. Lock-in hinders customers from changing suppliers in response to (predictable or unpredictable) changes in e ciency, and gives vendors lucrative ex post market power|over the same buyer in the case of switching costs (or brand loyalty), or over others with network e ects.Firms compete ex ante for this ex post power, using penetration pricing, introductory o ers, and price wars. Such \competition for the market" or \life-cycle competition" can adequately replace ordinary compatible competition, and can even be ercer than compatible competition by weakening di erentiation. More often, however, incompatible competition not only involves direct e ciency losses but also softens competition and magni es incumbency advantages. With network e ects, established rms have little incentive to o er better deals when buyers' and complementors' expectations hinge on non-e ciency factors (especially history such as past market shares), and although competition between incompatible networks is initially unstable and sensitive to competitive o ers and random events, it later \tips" to monopoly, after which entry is hard, often even too hard given incompatibility. And while switching costs can encourage small-scale entry, they discourage sellers from raiding one another's existing customers, and so also discourage more aggressive entry.Because of these competitive e ects, even ine cient incompatible competition is often more pro table than compatible competition, especially for dominant rms with installed-base or expectational advantages. Thus rms probably seek incompatibility too often. We therefore favor thoughtfully pro-compatibility public policy.

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Coordination and Lock-In: Competition with Switching Costs and Network Effects

2006

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“…In such cases, it is arguably appropriate to impose what is sometimes called the "Bell Doctrine" or "Baxter's Law," which prohibits vertical integration in order to isolate and quarantine the monopolist (Joskow andNoll 1999, Farrell andWeiser 2003).…”

Section: Structural Remedies/vertical Separationmentioning

confidence: 99%

Antitrust, the Internet, and the Economics of Networks

Spulber¹,

Yoo²

2014

Oxford Handbooks Online

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“…A la versión moderna de este argumento se le ha llamado ICE (en inglés significa. Farrel y Wieser (2003) definen el concepto de internalizar las eficiencias complementarias (ICE). Este concepto define las condiciones bajo las cuales un monopolista que opera una plataforma tiene incentivos a proveer acceso a su plataforma cuando este acceso genera eficiencias y a negarlo cuando es ineficiente.…”

Section: Integración Vertical Y Competenciaunclassified

Análisis de la literatura teórica sobre neutralidad de red y sugerencias de política

Sabido

2010

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Análisis de la literatura teórica sobre neutralidad de red y sugerencias de política alejandro castañeda sabido 1 n Resumen: Se analizan varias definiciones de neutralidad de red; se encuentra que en todas se asume implícitamente un esquema de arquitectura abierta que favorezca la entrada de nuevos proveedores. Sin embargo, hay diferencias sobre si se debe analizar la discriminación en precios que pueden implementar los operadores de la última milla. Se discute el tema de integración vertical en el caso en que existe competencia entre plataformas y cuando ésta no existe. Adicionalmente se discute un modelo de mercado de dos lados para analizar el problema de neutralidad de red; se encuentra que, en general, los monopolios y oligopolios no tienen incentivos a internalizar efectivamente las externalidades de red. Una política de neutralidad de red es superior, en términos de bienestar social, al bienestar social alcanzado por un monopolista u oligopolista que fija los cargos libremente. Se argumenta a favor de neutralidad de red pero que permita discriminación en precios con base en la calidad de servicio. Se argumenta también en contra de que los operadores que dan servicios a usuarios finales cobren a los sitios que generan contenido un cargo extra por entregar la información a sus clientes. Se plantea un esquema de interconexión bill and keep que permita que los operadores cobren a ambos lados del mercado, pero sin la posibilidad de ejercer poder de mercado. Esto tiene que ser acompañado con una política que favorezca la entrada de varias plataformas de acceso al usuario final: Cable, red telefónica, BPL y WIMAX.n Abstract: We analyze several definitions of net neutrality; we find that a common element is that all definitions implicitly assume an open architecture network that favors the entry of new content providers. However, the definitions differ in the possibility for the last mile operator to discriminate in prices. We discuss vertical

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Modularity, Vertical Integration, and Open Access Policies: Towards a Convergence of Antitrust and Regulation in the Internet Age

Abstract: for their helpful comments and encouragement.

Cited by 97 publications

References 8 publications

Coordination and Lock-In: Competition with Switching Costs and Network Effects

Coordination and Lock-In: Competition with Switching Costs and Network Effects

Antitrust, the Internet, and the Economics of Networks

Análisis de la literatura teórica sobre neutralidad de red y sugerencias de política

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