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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]

Author

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

Abstract

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.

Suggested Citation

  • Engelhardt, Sebastian & Freytag, Andreas & Köllmann, Volker, 2012. "Wettbewerbspolitischer Handlungsbedarf bei der Verknüpfung von zweiseitigen Märkten im Internet: Der Fall Google
    [Competition policy and vertical integration in internet-based two-sided markets: th
    ," MPRA Paper 43326, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43326
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    File URL: https://mpra.ub.uni-muenchen.de/43326/1/MPRA_paper_43326.pdf
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    References listed on IDEAS

    as
    1. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    2. Emanuele Tarantino, 2012. "A Note on Vertical Search Engines’ Foreclosure," Chapters,in: Recent Advances in the Analysis of Competition Policy and Regulation, chapter 8 Edward Elgar Publishing.
    3. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
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    5. 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 809-822, December.
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    8. Demsetz, Harold, 1969. "Information and Efficiency: Another Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 1-22, April.
    9. repec:mes:jeciss:v:30:y:1996:i:4:p:1212-1216 is not listed on IDEAS
    10. Scherer, F M, 1972. "Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation," American Economic Review, American Economic Association, vol. 62(3), pages 422-427, June.
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    Cited by:

    1. Wiebke Roß & Jens Weghake, 2015. "10 Jahre YouTube: Von dem Aufstieg einer Plattform und der Entwicklung neuer Märkte zum Kollateralschaden einer Google-Regulierung?," TUC Working Papers in Economics 0014, Abteilung für Volkswirtschaftslehre, Technische Universität Clausthal (Department of Economics, Technical University Clausthal).
    2. Haucap, Justus & Kehder, Christiane, 2014. "Stellen Google, Amazon, Facebook & Co. wirklich die marktwirtschaftliche Ordnung zur Disposition?," DICE Ordnungspolitische Perspektiven 62, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Roß Wiebke & Weghake Jens, 2015. "10 Jahre YouTube: Von dem Aufstieg einer Plattform und der Entwicklung neuer Märkte zum Kollateralschaden einer Google-Regulierung? / 10 Years YouTube: From the Arising of a Platform and the Developme," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 66(1), pages 195-220, January.

    More about this item

    Keywords

    two-sided markets; Internet; Google; market power; competition policy;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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