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Regulation and competition policy of the digital economy : essays in industrial organization

Abstract : This thesis addresses two issues facing regulators in the digital economy: the informational challenge generated by the use of new artificial intelligence technologies and the problem of the market power of large digital platforms. The first chapter of this thesis explores the implementation of a (costly and imperfect) audit system by a regulator seeking to limit the risk of damage generated by artificial intelligence technologies as well as its cost of regulation. Firms may invest in explainability to better understand their technologies and, thus, reduce their cost of compliance. When audit efficacy is not affected by explainability, firms invest voluntarily in explainability. Technology-specific regulation induces greater explainability and compliance than technology-neutral regulation. If, instead, explainability facilitates the regulator's detection of misconduct, a firm may hide its misconduct behind algorithmic opacity. Regulatory opportunism further deters investment in explainability. To promote explainability and compliance, command-and-control regulation with minimum explainability standards may be needed. The second chapter studies the effects of implementing a coopetition strategy between two two-sided platforms on the subscription prices of their users, in a growing market (i.e., in which new users can join the platform) and in a mature market. More specifically, the platforms cooperatively set the subscription prices of one group of users (e.g., sellers) and the prices of the other group (e.g., buyers) non-cooperatively. By cooperating on the subscription price of sellers, each platform internalizes the negative externality it exerts on the other platform when it reduces its price. This leads the platforms to increase the subscription price for sellers relative to the competitive situation. At the same time, as the economic value of sellers increases and as buyers exert a positive cross-network effect on sellers, competition between platforms to attract buyers intensifies, leading to a lower subscription price for buyers. The increase in total surplus only occurs when new buyers can join the market. Finally, the third chapter examines interoperability between an incumbent platform and a new entrant as a regulatory tool to improve market contestability and limit the market power of the incumbent platform. Interoperability allows network effects to be shared between the two platforms, thereby reducing the importance of network effects in users' choice of subscription to a platform. The preference to interact with exclusive users of the other platform leads to multihoming when interoperability is not perfect. Interoperability leads to a reduction in demand for the incumbent platform, which reduces its subscription price. In contrast, for relatively low levels of interoperability, demand for the entrant platform increases, as does its price and profit, before decreasing for higher levels of interoperability. Users always benefit from the introduction of interoperability.
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Submitted on : Wednesday, March 30, 2022 - 12:25:19 PM
Last modification on : Wednesday, June 15, 2022 - 8:54:41 PM


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  • HAL Id : tel-03624496, version 1



Adrien Raizonville. Regulation and competition policy of the digital economy : essays in industrial organization. Economics and Finance. Institut Polytechnique de Paris, 2021. English. ⟨NNT : 2021IPPAT028⟩. ⟨tel-03624496⟩



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