Competition and regulation in the digital economy

Introduction

The digital economy is of growing importance for society, but its development challenges the traditional approaches to competition policy and regulation, based on a benchmark of perfect competition that regulatory authorities aim at approaching in the various relevant markets.

Challenges in the Digital Economy

Economies of scale and scope are more the rule than the exception. Network effects and multi-sidedness are pervasive, information and data are shaping industries, the boundaries of the markets are becoming blurred, and industry dynamics are on a new scale.

These features make the perfect competition benchmark and the focus on individual markets less relevant, calling for a new conceptual framework for the analysis of competition in the digital economy.

Research Objectives

The proposed research aims at breaking new ground on four related fronts:

1. Ecosystem Competition: Competition in the digital economy is increasingly between ecosystems involving multiple products and, often, multiple actors.
2. Consumer Attention: Platforms compete for consumer attention, raising questions about consumer behaviour and platforms’ ability to influence it.
3. Vertical Competition and Cooperation: The digital revolution has drastically affected the way firms compete and cooperate along the vertical chains of production and distribution.
4. Data and Competition: The role of data raises questions not only about the interplay between business strategy and consumer privacy, but also about how the quest for data can shape entry and competition in product markets.

Proposed Avenues for Research

On each theme, several avenues are proposed to enhance our understanding of how competition works in the digital era. The insights will shed light on desirable changes for competition policy and regulation – interpreted in a broad sense, including policies that affect the functioning of digital markets such as consumer or privacy protection policies.