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

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 (a) leading Internet platforms have non-temporary market power and, based on this analysis, (b) whether any specific market regulation beyond general competition law rules is warranted in these three online markets.

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Notes

  1. 1.

    The capacity on one side of the market may be more limited than on the other. For example, the number of stands may be more limited on a trade show than the space for potential visitors.

  2. 2.

    A much more detailed analysis of a potential antitrust case against Google and the costs and benefits of various remedies can be found in Pollock (2010), Manne and Wright (2011) and Bork and Sidak (2012).

  3. 3.

    A detailed discussion of the market definition for online auctions and other electronic trading platforms can be found in Haucap and Wenzel (2009).

  4. 4.

    See Benkler (2006) for an in depth analysis why people join networks and in which ways they benefit from networks.

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Correspondence to Ulrich Heimeshoff.

Additional information

We thank Paul Welfens and the participants of the workshop on “Digital EU-Integration and Globalisation” in Wuppertal for their very helpful comments and discussions.

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Haucap, J., Heimeshoff, U. Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization?. Int Econ Econ Policy 11, 49–61 (2014). https://doi.org/10.1007/s10368-013-0247-6

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Keywords

  • Two-sided markets
  • Online markets
  • Digital economy
  • Antitrust
  • E-commerce

JEL Classification

  • L12
  • L41
  • L81
  • L82
  • L86