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Wettbewerbspolitischer Handlungsbedarf bei der Verknüpfung von zweiseitigen Märkten im Internet: Der Fall Google
[Competition policy and vertical integration in internet-based two-sided markets: the Google case]

  • Engelhardt, Sebastian
  • Freytag, Andreas
  • Köllmann, Volker

We discuss competition effects and possible regulation of vertical integration in internet-based two-sided markets against the background of the ongoing antitrust allegations against Google. In such markets, network effects and economics of scale often lead to dominating companies which are integrated over several markets. Although implying efficiency gains, the (dynamic) network effects and economics of scale may also create significant barriers to entry. These barriers of entry can be lowered if entrants can appropriate (parts of) the dynamic effects accumulated by the incumbents. At the same time, such externalities reduce incentives to invest in dynamic effects in the first place. Measures by firms that deter multi homing, increase switching costs or create incompatibilities are anti-competitive and should thus be prohibited. Systematic top listing of own products in the search results can leverage market power and reduce competition. However, there is yet no appropriate economic theory on the power’ of search engines. The often used concept of ‘search neutrality’ is not convincing.

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File URL: https://mpra.ub.uni-muenchen.de/43326/1/MPRA_paper_43326.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 43326.

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Date of creation: 18 Dec 2012
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Handle: RePEc:pra:mprapa:43326
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  1. Haucap, Justus & Wenzel, Tobias, 2011. "Wettbewerb im Internet: Was ist online anders als offline?," DICE Ordnungspolitische Perspektiven 16, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  2. Oliver Hart & Sanford Grossman, 1985. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Working papers 372, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Scherer, F M, 1972. "Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation," American Economic Review, American Economic Association, vol. 62(3), pages 422-27, June.
  4. Pollock Rufus, 2010. "Is Google the Next Microsoft: Competition, Welfare and Regulation in Online Search," Review of Network Economics, De Gruyter, vol. 9(4), pages 1-31, December.
  5. Mark Armstrong, 2005. "Competition in Two-Sided Markets," Industrial Organization 0505009, EconWPA.
  6. Richard Gilbert & Carl Shapiro, 1990. "Optimal Patent Length and Breadth," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 106-112, Spring.
  7. Dewenter, Ralf, 2006. "Das Konzept der zweiseitigen Maerkte am Beispiel von Zeitungsmonopolen," Working Paper 53/2006, Helmut Schmidt University, Hamburg.
  8. Baumol, William J, 1977. "On the Proper Cost Tests for Natural Monopoly in a Multiproduct Industry," American Economic Review, American Economic Association, vol. 67(5), pages 809-22, December.
  9. Demsetz, Harold, 1969. "Information and Efficiency: Another Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 1-22, April.
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