Big Tech, Big Data, And Competition Policy: Favoring Dynamic Over Static Competition

63 Pages Posted: 12 Mar 2021 Last revised: 22 Mar 2021

See all articles by Nicolas Petit

Nicolas Petit

European University Institute - Department of Law (LAW)

David Teece

Institute for Business Innovation

Date Written: March 22, 2021

Abstract

This paper gives a fresh account of competition in the digital economy. Our understanding is that usual static monopoly narratives paint with too broad a brush. We suggest that some leading firms in the digital economy have strong dynamic capabilities, and they are not durable monopolists. A few strategic errors by management and they are deeply impaired. We derive the theoretical implications of this, and outline what’s required to advance a deeper understanding of the digital economy. We look at policy and provide a normative formulation of the competitive process, highlighting dynamic competition and distinguishing it from static competition. We consider the economics of big data and big data management and explore how strong dynamic capabilities are necessary for Big Tech companies to get ahead and stay ahead. We explore different types of economic rent, suggest a modified welfare standard for competition policy, and formulate preliminary tests and predictors to measure dynamic competition.

Keywords: Dynamic Competition, Capabilities, Big Tech, Digital Economy, Data

JEL Classification: K20, K21, L40, L41, L50, O34

Suggested Citation

Petit, Nicolas and Teece, David J., Big Tech, Big Data, And Competition Policy: Favoring Dynamic Over Static Competition (March 22, 2021). Available at SSRN: https://ssrn.com/abstract=3229180 or http://dx.doi.org/10.2139/ssrn.3229180

Nicolas Petit

European University Institute - Department of Law (LAW) ( email )

Via Bolognese 156 (Villa Salviati)
50-139 Firenze
Italy

David J. Teece (Contact Author)

Institute for Business Innovation ( email )

F402 Haas School of Business, #1930
Berkeley, CA 94720-1930
United States
(510) 642-4041 (Phone)

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