Industrial Organization Paradigms, Empirical Evidence, and the Economic Case for Competition Policy

Abstract The rise of centralized mining pools for risk sharing does not necessarily undermine the decentralization required for blockchains: because of miners’ cross-pool diversification and pool managers’ endogenous fee setting, larger pools better internalize their externality on global hash rates, charge higher fees, attract disproportionately fewer miners, and grow more slowly. Instead, mining pools as a financial innovation escalate miners’ arms race and significantly increase the energy consumption of proof-of-work-based blockchains. Empirical evidence from Bitcoin mining supports our model’s predictions. The economic insights inform other consensus protocols and the industrial organization of mainstream sectors with similar characteristics but ambiguous prior findings.

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Understanding competition in digital markets: new perspectives on old practices

Competition Law Journal ◽

10.4337/clj.2021.03.04 ◽

2021 ◽

Vol 20 (3) ◽

pp. 139-145

Author(s):

Andrew Mell ◽

Gareth Shier

Keyword(s):

Economic Theory ◽

Industrial Organization ◽

Competition Policy ◽

Business Practices ◽

Policy Tools ◽

Digital Ecosystems ◽

Online Platforms ◽

Ex Post ◽

The World ◽

Ex Ante

Around the world, competition agencies and academics alike have raised concerns that the existing suite of policy tools and economic theory fail to capture all of the harms that can arise in digital markets. At the same time, other academics and practitioners consider that competition policy and industrial organization is unable to account for many of the benefits that online platforms and digital ecosystems can bring. As a range of new interventions – ranging from strengthened ex-post enforcement tools to new ex-ante regulations – are being proposed, we ask which view is right? Are the business practices observed in digital markets and targeted by these reforms so obviously harmful that they are deserving of a return to form-based prohibitions in place of effects-based analysis? Or does this represent an unhelpful regression, based on a misunderstanding of how these new types of markets function?

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Merchant Benefits and Public Policy towards Interchange: An Economic Assessment

Review of Network Economics ◽

10.2202/1446-9022.1083 ◽

2005 ◽

Vol 4 (4) ◽

Author(s):

Margaret E. Guerin-Calvert ◽

Janusz A. Ordover

Keyword(s):

Public Policy ◽

Empirical Evidence ◽

Competition Policy ◽

Economic Assessment ◽

Complex Nature ◽

Fixed Costs ◽

Interchange Fees ◽

Antitrust Laws ◽

Payments Systems

We analyze the complex nature of interactions among participants in "two-sided" payments system markets, examine empirical evidence on benefits, especially merchant benefits, and re-assess the role of interchange in balancing interests and allocating costs between merchants and consumers. We conclude there are substantial potential harms to payments systems, consumers, and merchants from imposing cost-based regulation of interchange fees, particularly with network fixed costs. Competition policy, in our view, is the best prescription through government intervention under the antitrust laws or private challenges to exclusionary strategies that hamper competition to the detriment of cardholders, merchants, and competing networks.

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Competition in Japan

The Journal of Economic Perspectives ◽

10.1257/089533004773563421 ◽

2004 ◽

Vol 18 (1) ◽

pp. 27-50 ◽

Cited By ~ 49

Author(s):

Michael E Porter ◽

Mariko Sakakibara

Keyword(s):

Empirical Evidence ◽

Competition Policy ◽

Industrial Structure ◽

Economic Recovery ◽

Economic Prosperity ◽

Internal Competition

This article examines competition in Japan and its link to postwar economic prosperity. While Japan's industrial structure and competition policy seem to indicate that competition in Japan has been less intense, the empirical evidence does not support this conclusion. The sectors in which competition was restricted prove to be those where Japan was not internationally successful. In the internationally successful sectors, internal competition in Japan was invariably fierce. While the level of competition in Japan is currently rising, economic recovery is still hindered by distortions in the competition in many industries.

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