The Role of Network Effects in Analyzing Market Access on High-Technology Platforms
28 Pages Posted: 10 Oct 2016 Last revised: 11 Oct 2016
Date Written: October 6, 2016
The present study analyzes how can positive network externalities in the form of network effects exert significant influence over the characterization of ‘market access’ in the context of high-technology markets.
Throughout the last two decades there has been a vast body of literature dedicated to instilling the notion of a distinct economic sector denominated as ‘high-technology markets’ for the purposes of clamoring for a unique and clustered antitrust enforcement. To that regard, some commentators have argued that courts generally exhibit a limited understanding of the ultimate economic effects of high technologies, generating the risk of halting innovation through inconsistent enforcement. In this context, the Supreme Court decision on Verizon Communications v. Law Offices of Curtis V. Trinko, LL.P. (2004), questioned the institutional capacity of courts in enforcing decisions implementing a ‘duty-to-deal’ on high-technology markets. To that regard, the present work contends that the understanding of ‘central planning’ flowing from the reasoning of the Supreme Court in Trinko is one of technical valuation, and should not preclude antitrust courts from effectively using their capabilities in constructively analyzing and programmatically enforcing Section 2 of the Sherman Act, and particularly in cases involving of high-technology markets.
Moreover, a modified analysis for the characterization of essential facilities and the corresponding determination of liability under Section 2 of the Sherman Act through the incorporation of basic notions that derive from classic network theory. It construes upon the liability test set forth in MCI Communications v. AT&T Corp., to incorporate an access-based approach in connection to the structural conditions present in the market.
Keywords: Antitrust, Network Effects, Regulation, High-Technology, Copyright, Internet, Digital Media, Law
JEL Classification: K21, D85, L10, L17
Suggested Citation: Suggested Citation