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The Cooperation Paradox

Author

Listed:
  • Eric K. Clemons

    (University of Pennsylvania)

  • Maximilian Schreieck

    (Technical University of Munich (TUM)
    Nantes Université, LEMNA, Institut d’Administration des Entreprises)

  • Sebastian Hermes

    (Technical University of Munich (TUM))

  • Frantz Rowe

    (Nantes Université, LEMNA, Institut d’Administration des Entreprises
    SKEMA Business School, Knowledge, Technology and Organization Department)

  • Helmut Krcmar

    (Technical University of Munich (TUM))

Abstract

Dominant American online platforms like Amazon Alexa or Google Assistant have become Life Control Interfaces (LCIs), which facilitate consumers’ online interactions and influence what consumers do and do not see and buy. These platforms operate outside of EU regulation, and create significant costs for traditional European firms in a wide range of industries. These platforms can reduce firms’ access to customers, can charge for enabling access to customers, or can charge for access to essential data on firms’ customers. Since these platforms enjoy monopoly power there is little restraint on their charges, which indirectly increase consumers’ prices. We propose that regulators encourage the formation of a consortium to offer a single integrated EU-based Life Control Interface (EuLCI). This consortium would increase the number of EuLCIs from zero to one, and thus would actually increase consumer choice. We call cooperation that enhances rather than limits choice The Cooperation Paradox.

Suggested Citation

  • Eric K. Clemons & Maximilian Schreieck & Sebastian Hermes & Frantz Rowe & Helmut Krcmar, 2022. "The Cooperation Paradox," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 459-471, June.
    • Handle: RePEc:spr:elmark:v:32:y:2022:i:2:d:10.1007_s12525-022-00534-2
    DOI: 10.1007/s12525-022-00534-2
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    References listed on IDEAS

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    Cited by:

    1. Eric K. Clemons & Ravi V. Waran & Sebastian Hermes & Maximilian Schreieck & Helmut Krcmar, 2022. "Computing and Social Welfare," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 417-436, June.

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    More about this item

    Keywords

    Life control interfaces; Online competition; Online cooperation and consortia; Online gateways; Online monopoly regulation; Online platform regulation;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • K24 - Law and Economics - - Regulation and Business Law - - - Cyber Law
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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