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La gratuité peut-elle avoir des effets anticoncurrentiels ? Une perspective d'économie industrielle sur le cas Google

Author

Listed:
  • Estelle Malavolti

    () (Toulouse School of economics enac-Leea)

  • Frederic Marty

    () (Ofce sciences-po)

Abstract

Firms operating in two-sided markets have to integrate in their optimal pricing structure the existence of indirect externalities across groups of consumers. Beyond direct externalities network effects,such markets are characterized by the increasing value of the platform for the users on one side with the number on the other side. As for Internet search platforms such as Google, their value for advertisers depends on the number of users and especially of precisely targeted ones. As a consequence, the optimal price structure in a two-sided market cannot be symmetrical. In other words, the price structure is not neutral and has to take into account such linkages between these two groups of users. From an economic point of view, it may make sense to impose no charge for the group that generates the most valuable externalities. With antitrust inquiries, such specificity imposes to consider simultaneously both sides of the markets. Otherwise, the risk of false negative decisions may arise. On one side the pricing strategy might be interpreted as a predatory practice and on the other side as an exploitative abuse. As the number and the loyalty of users on one side is an essential input to competition between platforms on the other side, it might be rational to subsidize them by acquiring exclusive rights on some valuable contents and to implement bundling and tying strategies. The main risk lies in some market foreclosure. The market might evolve towards vertically integrated ecosystems, e.g. a silos model of competition. Furthermore, competition authorities have to define a sound economics-based theory of harm to disentangle practices that reduce consumer welfare (by increasing switching costs) from ones that might be finally welfare-enhancing. The issue of remedies arises inexorably from this point. Our paper sheds light on these industrial economics and competition law issues.

Suggested Citation

  • Estelle Malavolti & Frederic Marty, 2013. "La gratuité peut-elle avoir des effets anticoncurrentiels ? Une perspective d'économie industrielle sur le cas Google," Documents de Travail de l'OFCE 2013-01, Observatoire Francais des Conjonctures Economiques (OFCE).
  • Handle: RePEc:fce:doctra:1301
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    File URL: http://www.ofce.sciences-po.fr/pdf/dtravail/WP2013-01.pdf
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    Cited by:

    1. Estelle Malavolti & Frédéric Marty, 2017. "State Aids granted by regional airports: a two-sided market analysis," Post-Print halshs-01538698, HAL.

    More about this item

    Keywords

    Two-sided markets; Internet search markets; exclusionary practices; market foreclosure; remedies;

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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