IDEAS home Printed from https://ideas.repec.org/p/zbw/dicedp/83.html
   My bibliography  Save this paper

Google, Facebook, Amazon, eBay: Is the internet driving competition or market monopolization?

Author

Listed:
  • Haucap, Justus
  • Heimeshoff, Ulrich

Abstract

This paper discusses the general characteristics of online markets from a competition theory perspective and the implications for competition policy. Three important Internet markets are analyzed in more detail: search engines, online auction platforms, and social networks. Given the high level of market concentration and the development of competition over time, we use our theoretical insights to examine whether leading Internet platforms have non-temporary market power. Based on this analysis we answer the question whether any specific market regulation beyond general competition law rules is warranted in these three online markets.

Suggested Citation

  • Haucap, Justus & Heimeshoff, Ulrich, 2013. "Google, Facebook, Amazon, eBay: Is the internet driving competition or market monopolization?," DICE Discussion Papers 83, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:83
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/68229/1/73435858X.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gary S. Becker & Kevin M. Murphy, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 941-964.
    2. Patrick Bajari & Ali Hortaçsu, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.
    3. Cédric Argenton & Jens Prüfer, 2012. "Search Engine Competition With Network Externalities," Journal of Competition Law and Economics, Oxford University Press, vol. 8(1), pages 73-105.
    4. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    5. Caillaud, Bernard & Jullien, Bruno, 2003. "Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-328, Summer.
    6. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    7. Haucap Justus & Wenzel Tobias, 2011. "Wettbewerb im Internet: Was ist online anders als offline?," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 60(2), pages 200-211, August.
    8. Michael Vogelsang, 2010. "Dynamics of two-sided internet markets," International Economics and Economic Policy, Springer, vol. 7(1), pages 129-145, May.
    9. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    10. David Lucking-Reiley, 1999. "Using Field Experiments to Test Equivalence between Auction Formats: Magic on the Internet," American Economic Review, American Economic Association, vol. 89(5), pages 1063-1080, December.
    11. Glenn Ellison & Sara Fisher Ellison, 2005. "Lessons About Markets from the Internet," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 139-158, Spring.
    12. Jeffrey Rohlfs, 1974. "A Theory of Interdependent Demand for a Communications Service," Bell Journal of Economics, The RAND Corporation, vol. 5(1), pages 16-37, Spring.
    13. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    14. Matthias Finger & Rolf W. Künneke (ed.), 2011. "International Handbook of Network Industries," Books, Edward Elgar Publishing, number 12961.
    15. Mark Armstrong & Robert Porter (ed.), 2007. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 3, number 1, December.
    16. Robert H. Bork & J. Gregory Sidak, 2012. "What Does The Chicago School Teach About Internet Search And The Antitrust Treatment Of Google?," Journal of Competition Law and Economics, Oxford University Press, vol. 8(4), pages 663-700.
    17. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
    18. Korbinian Blanckenburg & Michael Michaelis, 2008. "Regulierungsmöglichkeiten auf dem Markt für Online-Auktionen," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 88(6), pages 415-420, June.
    19. Pollock, Rufus, 2008. "Is Google the next Microsoft? Competition, Welfare and Regulation in Internet Search," MPRA Paper 8885, University Library of Munich, Germany.
    20. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    21. Gerhard Illing & Martin Peitz (ed.), 2006. "Industrial Organization and the Digital Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262090414, February.
    22. Haucap, Justus, 2012. "Wie lange hält Googles Monopol?," DICE Ordnungspolitische Perspektiven 32, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    23. Geoffrey G. Parker & Marshall W. Van Alstyne, 2005. "Two-Sided Network Effects: A Theory of Information Product Design," Management Science, INFORMS, vol. 51(10), pages 1494-1504, October.
    24. Paul Resnick & Richard Zeckhauser & John Swanson & Kate Lockwood, 2006. "The value of reputation on eBay: A controlled experiment," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 79-101, June.
    25. Mikhail I Melnik & James Alm, 2002. "Does a Seller’s eCommerce Reputation Matter? Evidence from eBay Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 337-349, September.
    26. 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.
    27. Bruno Jullien, 2005. "Two-sided Markets and Electronic Intermediaries," CESifo Economic Studies, CESifo, vol. 51(2-3), pages 233-260.
    28. David Evans & Richard Schmalensee, 2007. "The Industrial Organization of Markets with Two-Sided Platforms," CPI Journal, Competition Policy International, vol. 3.
    29. Milton L Mueller & Wolter Lemstra, 2011. "Liberalization and the Internet," Chapters, in: Matthias Finger & Rolf W. Künneke (ed.), International Handbook of Network Industries, chapter 9, Edward Elgar Publishing.
    30. Melnik, Mikhail I & Alm, James, 2002. "Does a Seller's Ecommerce Reputation Matter? Evidence from eBay Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 337-349, September.
    31. Illing, Gerhard (Ed.), . "Industrial Organization and the Digital Economy," Monographs in Economics, University of Munich, Department of Economics, number 19506, June.
    32. Michael Kurth, 1985. "Review," Public Choice, Springer, vol. 45(2), pages 223-224, January.
    33. Wright Julian, 2004. "One-sided Logic in Two-sided Markets," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-21, March.
    34. Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 28, pages 1701-1844, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Justus Haucap & Torben Stühmeier, 2016. "Competition and antitrust in Internet markets," Chapters, in: Johannes M. Bauer & Michael Latzer (ed.), Handbook on the Economics of the Internet, chapter 9, pages 183-210, Edward Elgar Publishing.
    2. Justus Haucap, 2019. "Competition and Competition Policy in a Data-Driven Economy," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(4), pages 201-208, July.
    3. Haucap Justus & Wenzel Tobias, 2011. "Wettbewerb im Internet: Was ist online anders als offline?," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 60(2), pages 200-211, August.
    4. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    5. Budzinski, Oliver, 2016. "Aktuelle Herausforderungen der Wettbewerbspolitik durch Marktplätze im Internet," Ilmenau Economics Discussion Papers 103, Ilmenau University of Technology, Institute of Economics.
    6. Nestor Duch-Brown, 2017. "The competitive landscape of online platforms," JRC Working Papers on Digital Economy 2017-04, Joint Research Centre (Seville site).
    7. Haucap, Justus & Heimeshoff, Ulrich, 2017. "Ordnungspolitik in der digitalen Welt," DICE Ordnungspolitische Perspektiven 90, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    8. Jonathan Levin, 2011. "The Economics of Internet Markets," Discussion Papers 10-018, Stanford Institute for Economic Policy Research.
    9. Filistrucchi, L. & Geradin, D.A.A.G. & van Damme, E.E.C., 2012. "Identifying Two-Sided Markets," Discussion Paper 2012-008, Tilburg University, Tilburg Law and Economic Center.
    10. Hildebrandt, Christian & Arnold, René, 2018. "Marktbeobachtung in der digitalen Wirtschaft – Ein Modell zur Analyse von Online-Plattformen," WIK Discussion Papers 427, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    11. Jullien, Bruno & Pavan, Alessandro & Rysman, Marc, 2021. "Two-sided Markets, Pricing, and Network Effects," CEPR Discussion Papers 16480, C.E.P.R. Discussion Papers.
    12. Krämer, Jan & Wohlfarth, Michael, 2018. "Market power, regulatory convergence, and the role of data in digital markets," Telecommunications Policy, Elsevier, vol. 42(2), pages 154-171.
    13. Caccinelli, Chiara & Toledano, Joëlle, 2017. "Assessing Anticompetitive Practices in Two-Sided Markets: A Comparative Analysis of four Antitrust Proceedings against Booking.com," 28th European Regional ITS Conference, Passau 2017 169452, International Telecommunications Society (ITS).
    14. Estelle Malavolti, 2016. "Single Till or Dual Till at airports: a Two-Sided Market Analysis," Post-Print hal-01406372, HAL.
    15. Howell, Bronwyn, 2006. "Unveiling 'Invisible Hands': Two-Sided Platforms in Health Care Markets," Working Paper Series 3841, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    16. Doh-Shin Jeon & Nikrooz Nasr, 2016. "News Aggregators and Competition among Newspapers on the Internet," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 91-114, November.
    17. Christian Stummer & Dennis Kundisch & Reinhold Decker, 2018. "Platform Launch Strategies," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 60(2), pages 167-173, April.
    18. Filistrucchi, L. & Gerardin, D. & van Damme, E.E.C. & Keunen, S. & Klein, T.J. & Michielsen, T.O. & Wileur, J., 2010. "Mergers in Two-Sided Markets - A Report to the NMa," Other publications TiSEM f901d1fe-8878-444e-a685-8, Tilburg University, School of Economics and Management.
    19. Peitz, Martin & Valletti, Tommaso, 2015. "Reassessing competition concerns in electronic communications markets," Telecommunications Policy, Elsevier, vol. 39(10), pages 896-912.
    20. Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, in: V.A. Ginsburgh & D. Throsby (ed.), Handbook of the Economics of Art and Culture, edition 1, volume 1, chapter 18, pages 567-614, Elsevier.

    More about this item

    Keywords

    two-sided markets; online markets; digital economy; antitrust; e-commerce;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:dicedp:83. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/diduede.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/diduede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.