How did Tirole halt upward inward the plain of industrial organization?
"It was totally fortuitous. I was i time inward a corridor alongside my classmate Drew Fudenberg, who's instantly a professor at MIT. And i solar daytime he said, "Oh, there's this interesting field, industrial organization; yous should attend approximately lectures." So I did. I took an industrial scheme course of written report given past times Paul Joskow as well as Dick Schmalensee, but non for credit, as well as I idea the plain of written report was real interesting indeed.
"I had to do my Ph.D. quickly. I was a civil retainer inward France. I was given 2 years to do my Ph.D. (I was granted 3 at the end.) It was variety of crazy."Why large meshing firms heighten competition concerns
"[N]ew platforms take away maintain natural monopoly features, inward that they present large network externalities. I am on Facebook because yous are on Facebook. I occupation the Google search engine or Waze because at that spot are many people using it, therefore the algorithms are built on to a greater extent than information as well as predict better. Network externalities tend to do monopolies or tight oligopolies.
"So nosotros take away maintain to take away maintain that into account. Maybe non past times breaking them up, because it's difficult to interruption upward such firms: Unlike for AT&T or ability companies inward the past, the applied scientific discipline changes real fast; besides, many of the services are built on information that are mutual to all services. But to boot the bucket along the marketplace contestable, nosotros must foreclose the tech giants from swallowing upward their futurity competitors; easier said than done of course of written report ...
Bundling practices past times the tech giants are also of concern. Influenza A virus subtype H5N1 startup that may boot the bucket an efficient competitor to such firms by as well as large enters inside a marketplace niche; it's real difficult to move inward all segments at the same time. Therefore, bundling may foreclose efficient entrants from entering marketplace segments as well as collectively challenging the incumbent on the overall technology.
"Another number is that virtually platforms offering yous 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 virtually merchants are listed on the platform as well as the platform is guaranteed the lowest price, at that spot is no incentive for yous to await anywhere else; yous take away maintain boot the bucket a "unique" customer, as well as therefore the platform tin move laid upward large fees to the merchant to acquire access to you. Interestingly, due to cost uniformity, these fees are paid past times both platform as well as nonplatform users — therefore each platform succeeds inward taxing its rivals! That tin move sometimes last quite problematic for competition.
"Finally, at that spot is the tricky number of information ownership, which volition last a barrier to entry inward AI-driven innovation. There is a electrical flow fence betwixt platform ownership (the electrical flow state) as well as the prospect of a user-centric approach. This is an underappreciated plain of written report that economists should take away maintain upward as well as effort to brand progress on."
The economics 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, as well as therefore on. Of course of written report at that spot is a grab on the other side: the huge markups levied on merchants or advertisers. But nosotros cannot exactly conclude from this observation that Google or Visa are underserving monopolies on i side as well as are preying against their rivals on the other side. We demand to consider the marketplace every bit a whole.
"We take away maintain learned also that platforms acquit real differently from traditional firms. They tend to last much to a greater extent than protective of consumer interests, for example. Not past times philanthropy, but exactly because they take away maintain a human relationship alongside the consumers as well as tin move accuse to a greater extent than to them (or attract to a greater extent than of them as well as cash inward on advertising) if they relish a higher consumer surplus. That's why they allow competition amid applications on a platform, that's why they innovate rating systems, that's why they choose out nuisance users (a merchant who wants to last on the platform ordinarily has to satisfy diverse requirements that are protective of consumers). Those mechanisms — for example, squall for collateral from participants to an central or putting the coin inward an escrow until the consumer is satisfied — covert the merchants. The practiced merchants discovery the cost minimal, as well as the bad ones are screened out.
"That's real unlike from what I telephone telephone the "vertical model" inward which, say, a patent possessor exactly sells a license downstream to a theatre as well as and then lets the theatre exercise its total monopoly power.
"I'm non maxim the platform model is ever a ameliorate model, but it has been growing for practiced argue every bit it's to a greater extent than protective of consumer interest. Incidentally, today the 7 largest marketplace caps inward the globe are two-sided platforms."Sumber http://conversableeconomist.blogspot.com/
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