Merger Policy in the E-conomy

Table of Contents

Chapter One: Introduction

Chapter Two: The E-conomy

Section 2.1.: The Peculiarity of the E-conomy

Section 2.1.1.: Investment and Increasing Returns

Section 2.1.2.: Network Effects

Section 2.1.3.: Output Properties

Section 2.1.4.: Pioneering Effects and Instant Scalability

Section 2.1.5.: The Winner–Takes–Most Effects

Section 2.2.: The E-conomy’s Essence in Antitrust

Section 2.3.: Dynamic v. Perfect Competition

Chapter Three: Implications for Competition Policy

Section 3.1.: The Commission’s Relevant Market Definition

Section 3.1.1.: The Substitutability Test

Section 3.1.2.: Entry Analysis

Section 3.1.3.: Market Integration

Section 3.1.4.: Market Shares

Section 3.2.: Treatment of Dominance

Section 3.3.: Accounting for the Risks

Chapter Four: A Regulatory Outlook

Section 4.1.: Pragmatic Analysis

Section 4.1.1.: The SSNIP – A Performance Interface

Section 4.1.2.: Barriers to Entry and Subtle Incentives

Section 4.1.3.: Market Power – The Volatile Incidence

Chapter Five: A Dynamic Intermarket Conception

Objectives and Core Topics

This dissertation examines the economic policy environment surrounding European merger regulation within high-tech industries. It specifically explores how dynamic competition—characterized by rapid technological change and innovation—challenges traditional antitrust methods, arguing for a more pragmatic framework that avoids premature conclusions about dominance and market lock-in.

• Analysis of the unique parameters of the "e-conomy" (e.g., network effects, increasing returns).
• Critique of static competition models in the context of high-tech and fast-changing markets.
• Evaluation of the Commission’s relevant market definition tools, including the SSNIP test.
• Proposing dynamic analytical tools to assess market power and barriers to entry more accurately.
• Case study insights into ISP markets and vertical integration strategies.

Excerpt from the Book

Summary of Chapters

Chapter One: Introduction: Provides an overview of the policy context, introducing the tension between high-tech industry dynamics and static merger regulation, and sets the goal of establishing a more pragmatic analytical framework.

Chapter Two: The E-conomy: Defines the core characteristics of the "e-conomy," such as network effects, increasing returns, and instant scalability, while contrasting dynamic competition with traditional perfect competition models.

Chapter Three: Implications for Competition Policy: Analyzes the deficiencies in the European Commission's current relevant market definition, focusing on challenges with the SSNIP test, entry analysis, and market share evaluation.

Chapter Four: A Regulatory Outlook: Proposes refined analytical tools for merger control, emphasizing a performance-based test, capability explanations, and longer time horizons to assess potential competition.

Chapter Five: A Dynamic Intermarket Conception: Concludes that Schumpeterian dynamic competition is the most accurate approach for understanding intermarket competition and calls for a regulatory shift to improve consumer welfare.

Keywords

Merger Policy, E-conomy, High-Tech Industries, Dynamic Competition, Antitrust, Relevant Market Definition, Network Effects, Increasing Returns, Instant Scalability, Schumpeterian, Innovation, Consumer Welfare, Vertical Integration, SSNIP, Market Dominance

Frequently Asked Questions

What is the primary focus of this dissertation?

The paper addresses the economic policy context surrounding European merger regulation in high-tech industries, focusing on how to adapt antitrust analysis to reflect the dynamic nature of these markets.

What are the central themes discussed in the work?

Key themes include the peculiarities of the "e-conomy" (network effects, increasing returns), the debate between static and dynamic competition, and the necessity of reorienting market definition and dominance assessment.

What is the primary goal or research question?

The goal is to provide a pragmatic framework for merger analysis that more accurately reflects the ongoing transformation of industrial organization in the high-tech environment.

Which scientific methodology is applied?

The work employs an analytical approach based on academic theories of dynamic competition, empirical studies of software and ISP markets, and a legal evaluation of the Commission’s current merger regulation practice.

What is covered in the main body of the text?

The main body breaks down the economic parameters of the e-conomy, critiques traditional market definitions like the SSNIP test, explores entry and dominance in high-tech sectors, and proposes alternative performance-based tools for regulators.

Which keywords characterize the research?

The paper is characterized by terms such as Dynamic Competition, Network Effects, Schumpeterian process, SSNIP, Vertical Integration, and Market Power.

How does the author view the "SSNIP" test in the e-conomy?

The author argues that the SSNIP test is of limited utility in the e-conomy because it relies on price cross-elasticities, while competition in high-tech sectors is primarily driven by quality and performance rather than price.

What is the author's stance on vertical integration in tech markets?

The author contends that vertical integration is the overarching organizational form in the e-conomy and warns that regulators often impose "far-fetched" undertakings that could destroy the efficiencies this integration provides.

Does the author support the Commission's current approach to mergers?

The author is critical of the Commission's tendency to apply static competition analysis to dynamic industries, suggesting that it often results in overly narrow market definitions and incorrect assessments of dominance.