Digital platforms—the new commanding heights?

The jury is still out on if digital platforms tend towards monopoly—and hence whether they need to be regulated tightly, broken up or replaced by state-owned platforms
By Niranjan Rajadhyaksha – Is the internet a private good, a public good or a club good? This technical question strikes at the heart of the regulatory issues that are likely to grow in importance as the digital economy expands in the coming years.

The distinction between these three categories of goods depends on two core underlying issues. First, does the consumption of a good by one person reduce its availability to others?

Second, is anyone excluded from using a good?

Why does all this matter in the digital economy? Regulatory economists are now grappling with the challenge of analysing dominant players in various parts of the digital economy. Think Facebook or Amazon or Google.

Their market shares in their respective markets would qualify as markers of monopoly in the traditional economies. Also, these digital companies have emerged as multifaceted platforms on which other participants in the digital economy operate. Economic theory suggests that such platform markets tend towards monopoly. more>


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