Markets and Regulation in the Age of Big Tech

20 Pages Posted: 16 Dec 2021

See all articles by Kaushik Basu

Kaushik Basu

Cornell University - Department of Economics; IZA Institute of Labor Economics; Brookings Institution

Aviv Caspi

Stanford University

Robert C. Hockett

Cornell University - Law School

Date Written: December 14, 2021

Abstract

The digital revolution, along with the growth of the companies known collectively as Big Tech, is transforming the global economy and giving rise to novel policy challenges. This paper analyzes the microeconomic foundations of this change, particularly how the natures of competition and oligopolistic equilibria are changing as a result of the large returns to scale and the global connectivity made possible by these new technologies. We then discuss how these changes fit into the existing regulatory landscape and argue that, for certain kinds of large digital-platform firms, existing antitrust laws may not be adequate. We conclude by considering more radical reform, such as requiring certain platform firms to be organized as nonprofits or public utilities.

Keywords: digital revolution,Big Tech,vertically serrated industries,maroon theorem,profit sharing

JEL Classification: O1,L4

Suggested Citation

Basu, Kaushik and Caspi, Aviv and Hockett, Robert C., Markets and Regulation in the Age of Big Tech (December 14, 2021). Capitalism & Society, Volume 15, Issue 1 (2021), Available at SSRN: https://ssrn.com/abstract=3985585

Kaushik Basu (Contact Author)

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States
607-255-2525 (Phone)
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IZA Institute of Labor Economics

P.O. Box 7240
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Germany

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
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Aviv Caspi

Stanford University ( email )

Stanford, CA 94305
United States

Robert C. Hockett

Cornell University - Law School ( email )

Myron Taylor Hall
Cornell University
Ithaca, NY 14853-4901
United States

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