Finance Papers

Document Type

Journal Article

Date of this Version

2010

Publication Source

Journal of Management Information Systems

Volume

27

Issue

3

Start Page

43

Last Page

80

DOI

10.2753/MIS0742-1222270303

Abstract

Some digital business models may be so innovative that they overwhelm existing regulatory mechanisms, both legislation and historical jurisprudence, and require extension to or modification of antitrust law. Regulatory policies that were developed in response to nineteenth- or twentieth-century antitrust concerns dealt principally with economies of scale leading to monopoly power and may not be well suited to the issues of network effects or third-party payer online business models such as sponsored search. From the perspective of information systems economics, we investigate if such third-party payer digital systems require intervention as profound as the government's innovative approach to the problems posed by AT&T in the 1913 Kingsbury Commitment, establishing the first private regulated monopoly. Google provides an example of a company whose innovative digital business model is difficult to fit into current regulatory frameworks, and may provide examples of the issues that might require an extension to regulatory policy.

Copyright/Permission Statement

This is an Accepted Manuscript of an article published by Taylor & Francis in Journal of Management Information Systems on 2010, available online: http://wwww.tandfonline.com/10.2753/MIS0742-1222270303

Keywords

antitrust, bundling and tying, contestability, deterred market entry, digital business strategies, essential facilities doctrine, Google, key word auctions, online search, relevant market share, sponsored search

Embargo Date

6-8-2016

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Date Posted: 27 November 2017

This document has been peer reviewed.