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Self-preferencing and foreclosure in digital markets: Theories of harm for abuse cases

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Abstract

Antitrust agencies all over the world have been investigating large digital platforms for practices which may constitute an abuse of dominance. Here I discuss practices (including "selfpreferencing" and denial or degradation of interoperability) which can be interpreted as foreclosure in vertically-related or complementary markets. I discuss in particular a few high-profile cases involving Amazon, Apple, Facebook and Google. I focus on possible theories of harm for such cases and show that both original simple models and well-established economic theories (adapted or interpreted) provide a rationale for anti-competitive foreclosure.

Suggested Citation

  • Massimo Motta, 2022. "Self-preferencing and foreclosure in digital markets: Theories of harm for abuse cases," Economics Working Papers 1851, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:1851
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    1. Markus Reisinger & Emanuele Tarantino, 2015. "Vertical integration, foreclosure, and productive efficiency," RAND Journal of Economics, RAND Corporation, vol. 46(3), pages 461-479, September.
    2. Dennis W. Carlton & Michael Waldman, 2002. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 194-220, Summer.
    3. Jay Pil Choi & Doh-Shin Jeon, 2021. "A Leverage Theory of Tying in Two-Sided Markets with Nonnegative Price Constraints," American Economic Journal: Microeconomics, American Economic Association, vol. 13(1), pages 283-337, February.
    4. Rey, Patrick & Tirole, Jean, 2007. "A Primer on Foreclosure," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 33, pages 2145-2220, Elsevier.
    5. Chiara Fumagalli & Massimo Motta, 2020. "Dynamic Vertical Foreclosure," Journal of Law and Economics, University of Chicago Press, vol. 63(4), pages 763-812.
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    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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