Tech Platforms and Market Power: What’s the Optimal Policy Response?

54 Pages Posted: 12 Nov 2021

See all articles by Thomas A. Lambert

Thomas A. Lambert

University of Missouri - School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: November 2021

Abstract

This paper provides a comparative institutional analysis of the leading approaches to addressing the market power of large digital platforms: (1) the traditional US antitrust approach; (2) imposition of ex ante conduct rules such as those in the EU’s Digital Markets Act and several bills recently advanced by the Judiciary Committee of the US House of Representatives; and (3) ongoing agency oversight, exemplified by the UK’s newly established “Digital Markets Unit.” After identifying the advantages and disadvantages of each approach, this paper examines how they might play out in the context of digital platforms. It first examines whether antitrust is too slow and indeterminate to tackle market power concerns arising from digital platforms. It next considers possible error costs resulting from the most prominent proposed conduct rules. It then shows how three features of the agency oversight model—its broad focus, political susceptibility, and perpetual control—render it particularly vulnerable to rent-seeking efforts and agency capture. The paper concludes that antitrust’s downsides (relative indeterminacy and slowness) are likely to be less significant than those of ex ante conduct rules (large error costs resulting from high informational requirements) and ongoing agency oversight (rent-seeking and agency capture).

Keywords: Digital Markets Act, digital platforms, antitrust, digital markets unit, monopolization, structural separations, interoperability data portability, Google, Amazon, Facebook, regulation

JEL Classification: L41, L43, L51, L52, K21, K23

Suggested Citation

Lambert, Thomas Andrew, Tech Platforms and Market Power: What’s the Optimal Policy Response? (November 2021). Mercatus Working Paper, Available at SSRN: https://ssrn.com/abstract=3959930 or http://dx.doi.org/10.2139/ssrn.3959930

Thomas Andrew Lambert (Contact Author)

University of Missouri - School of Law ( email )

Missouri Avenue & Conley Avenue
Columbia, MO MO 65211
United States

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