23 July 2018

This is Intriguing

Harold Feld, Sr. VP and lawyer at Public Knowledge, has an interesting way to measure excessive market power for anti-trust purposes, that one can measure the the cost of exclusion:
In my last blog post, I explained my working definition for what constitutes a “digital platform.” Today, I focus on another concept that gets thrown around a lot: “dominant.” While many regulations promoting consumer protection and competition apply throughout a sector, some economic regulations apply to “dominant” firms or firms with “market power.” Behavior that is harmless, or potentially even positive when done by smaller companies or in a more competitive marketplace, can be anticompetitive or harmful to consumers when done by dominant firms — regardless of the firm’s actual intent.

For reasons discussed in my previous blog posts, defining what constitutes “dominant” (or even identifying a single market in which to make such a determination), presents many challenges using the traditional tools of analysis favored by antitrust enforcers and regulators. I therefore propose that we use the cost of exclusion (“COE,” because nothing in policy is taken seriously unless it has its own acronym) as the means of determining when we need to apply regulation to “dominant” firms. That is to say, the greater the cost to individuals and firms (whether as consumers or producers or any of the other roles they may play simultaneously on digital platforms), the greater the need for regulations to protect platform users from harm. If a firm is “too big to lose access to,” then we should treat that firm as dominant.
It's not the only potential standard for antitrust, but, particularly in the context of large digital platforms, it provides an additional tool to justify regulating large dominant firms.

Now if only antitrust can put the ahistorical and dishonest writings of  Robert Bork behind it.


Stephen Montsaroff said...

I am not sure it is wise to dismiss every theory you dislike as dishonest.

I have no reason not to believe that the Chicago school has convinced themselves of the honesty of their reasoning.

Stephen Montsaroff said...

BTW, it would be good to do some quantifying of this as a theory.

Russell LaHart said...

So were Sinclair Media to buy Google, regulation would be in order.

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