How did Tirole halt upwards inwards the champaign of industrial organization?
"It was totally fortuitous. I was ane time inwards a corridor with my classmate Drew Fudenberg, who's similar a shot a professor at MIT. And ane twenty-four hr menstruum he said, "Oh, there's this interesting field, industrial organization; you lot should attend precisely about lectures." So I did. I took an industrial scheme class given yesteryear Paul Joskow together with Dick Schmalensee, but non for credit, together with I idea the dependent champaign was really interesting indeed.
"I had to do my Ph.D. quickly. I was a civil retainer inwards France. I was given 2 years to do my Ph.D. (I was granted 3 at the end.) It was form of crazy."Why large cyberspace firms enhance competition concerns
"[N]ew platforms receive got natural monopoly features, inwards that they evidence large network externalities. I am on Facebook because you lot are on Facebook. I utilization the Google search engine or Waze because at that topographic point are many people using it, therefore the algorithms are built on to a greater extent than information together with predict better. Network externalities tend to do monopolies or tight oligopolies.
"So nosotros receive got to receive got that into account. Maybe non yesteryear breaking them up, because it's difficult to pause upwards such firms: Unlike for AT&T or ability companies inwards the past, the engineering changes really fast; besides, many of the services are built on information that are mutual to all services. But to proceed the marketplace position contestable, nosotros must preclude the tech giants from swallowing upwards their time to come competitors; easier said than done of class ...
Bundling practices yesteryear the tech giants are also of concern. H5N1 startup that may give-up the ghost an efficient competitor to such firms mostly enters inside a marketplace position niche; it's really difficult to acquire inwards all segments at the same time. Therefore, bundling may preclude efficient entrants from entering marketplace position segments together with collectively challenging the incumbent on the overall technology.
"Another number is that nearly platforms offering you lot a best cost guarantee, also called a "most favored nation" clause or a cost parity clause. You every bit a consumer are guaranteed to acquire the lowest cost on the platform, every bit required from the merchants. Sounds good, except that if all or nearly merchants are listed on the platform together with the platform is guaranteed the lowest price, at that topographic point is no incentive for you lot to hold back anywhere else; you lot receive got give-up the ghost a "unique" customer, together with therefore the platform tin laid upwards large fees to the merchant to acquire access to you. Interestingly, due to cost uniformity, these fees are paid yesteryear both platform together with nonplatform users — therefore each platform succeeds inwards taxing its rivals! That tin sometimes live on quite problematic for competition.
"Finally, at that topographic point is the tricky number of information ownership, which volition live on a barrier to entry inwards AI-driven innovation. There is a electrical flow scrap betwixt platform ownership (the electrical flow state) together with the prospect of a user-centric approach. This is an underappreciated dependent champaign that economists should receive got upwards together with travail to brand progress on."
The economic science of two-sided platforms
"We acquire a fantastic bargain from Google or credit carte platforms. Their services are costless to consumers. We acquire cashback bonuses, nosotros acquire costless email, Waze, YouTube, efficient search services, together with therefore on. Of class at that topographic point is a grab on the other side: the huge markups levied on merchants or advertisers. But nosotros cannot precisely conclude from this observation that Google or Visa are underserving monopolies on ane side together with are preying against their rivals on the other side. We demand to consider the marketplace position every bit a whole.
"We receive got learned also that platforms bear really differently from traditional firms. They tend to live on much to a greater extent than protective of consumer interests, for example. Not yesteryear philanthropy, but only because they receive got a human relationship with the consumers together with tin accuse to a greater extent than to them (or attract to a greater extent than of them together with cash inwards on advertising) if they relish a higher consumer surplus. That's why they allow competition with applications on a platform, that's why they innovate rating systems, that's why they choose out nuisance users (a merchant who wants to live on on the platform ordinarily has to satisfy diverse requirements that are protective of consumers). Those mechanisms — for example, yell for collateral from participants to an telephone substitution or putting the coin inwards an escrow until the consumer is satisfied — enshroud the merchants. The skillful merchants abide by the cost minimal, together with the bad ones are screened out.
"That's really dissimilar from what I telephone telephone the "vertical model" inwards which, say, a patent possessor precisely sells a license downstream to a theater together with and therefore lets the theater exercise its total monopoly power.
"I'm non maxim the platform model is ever a meliorate model, but it has been growing for skillful argue every bit it's to a greater extent than protective of consumer interest. Incidentally, today the 7 largest marketplace position caps inwards the basis are two-sided platforms."Sumber http://conversableeconomist.blogspot.com/
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