Abstract:

Competition policy faces new challenges in its application to digital markets and online platforms. This article develops an analytical framework that rests on three pillars: (a) only conduct that, by restricting competition, reduces long-term social welfare should be prohibited; (b) in applying such a rule, it is important to bear in mind that, under imperfect information, a decision-maker’s task is to minimise the risk and cost of both false convictions and false acquittals: (c) dynamic efficiency is a key driver of long-term social welfare, economic growth and productivity. The article goes on to apply this framework to three specific issues that are debated in relation to digital markets and online platforms: (a) market definition; (b) barriers to entry, including data and Big Data; (c) innovation.

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