Reconceiving Big Tech: Decentralizing the Industry to Align Incentives and Maximize Total Welfare

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This paper reconsiders competition in monetized (zero-priced) digital markets, in the context of the EU’s proposed Digital Markets Act. From first principles, it builds a novel argument that monetized (zero-priced) markets always tip towards the best product in the market. It then shows how firms in these markets use anti-competitive tying to extend their dominant position from a consumer facing market into other more lucrative markets (i.e. online advertising) to gain a large monopoly profit. It suggests marketization, a new remedy that can prevent this harmful behavior (and the concomitant harms), and suggests how it could be implemented using the proposed DMA.