25 feb 1999 anni - FTC: 19th Century regulations, 21st Century Problems

Descrizione:

===EXTRACT===
"...against these considerable [anti-trust] arguments is the simple fact that a dominant network, by exploiting its position, can not only perpetuate its domination over a substantial period of time, but can extract very substantial monopoly rents from consumers. There also should be a concern that by excluding from the network all except the dominant firm or its partners, potential participants who themselves may be innovators and who might carry technology beyond the level of the initial network arrangement are denied an opportunity to innovate so as to improve or actually surpass the initial network arrangement."

How tech monopolies differ from traditional industrial monopolies

[Foreseeing monopoly establishment] is far more difficult in high-tech industries such as biotechnology, where products that might curtail the market power of a dominant incumbent firm are not in existence yet, and will not reach the market for several years;(6) or in the cable industry where the essential question is when satellite transmission will become a real competitive force in the cable market."

"Speed of Market Transition. New generations of products, undermining existing market power, appear more frequently in high-tech than in mature industries. In the first half of the 20th Century, firms in steel, oil and aluminum remained dominant for generations, but that is not the case in high-tech . IBM was a dominant firm if not a monopolist in certain markets when the government initiated its case in 1969, but it had lost monopoly power 13 years later when the case was abandoned."

"...litigation lags are likely to be longer than the time it would take for competitive forces to reconfigure an industry..."

"Need for Collaborative Activities. In high-tech industries... Collaboration and later coordination on standards may be essential to allow products to work at all. As a result, some have suggested that antitrust must abandon its entrenched skepticism of cooperative arrangements and allow more leeway in high-tech markets."

"Output and Price Effects. The traditional profile of a monopolist is of a firm that will curtail output in order to raise price. But that model often does not hold in high-tech markets....High-tech firms often price aggressively at the outset to achieve dominant market positions and ultimately to take advantage of economies of scale. ...

6. Network Efficiencies.... These efficiencies occur when the value of a product or service is connected with the number of individuals who use it. This can occur directly when a product's value is determined by the number of users in the network - for example, fax machines. It also can occur indirectly where a product achieves dominance and producers of essential complementary products (for example, software firms that write programs for a dominant platform) overwhelmingly devote their resources in a way that is useable only with the dominant system [effectively reinforcing the dominance of that system]....


"Once a network monopoly is in place, it often is a simple matter for the monopolist to exclude would-be challengers. A network monopolist may have the ability to monopolize successive generations of product, or complementary products or services, simply by adopting a policy of allowing only those products manufactured by it to connect with the existing network. One result may be that over time, the best products or services may not win out. Also, potential competitors, recognizing the enormous difficulties of challenging an incumbent network monopolist, may lose incentives to compete."

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