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Fairness and Contestability in the Digital Markets Act
Crémer, Jacques Crawford, Gregory S. Dinielli, David Fletcher, Amelia Heidhues, Paul Schnitzer, Monika Scott Morton, Fiona
Crémer, Jacques
Crawford, Gregory S.
Dinielli, David
Fletcher, Amelia
Heidhues, Paul
Schnitzer, Monika
Scott Morton, Fiona
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Abstract
According to the managerial strategy literature, a, if not the, key to large profits is the creation of “moats” that protect firms from competition. Firms with market power create moats to maintain that power, and there exist strong incentives to develop new technologies that allow for broader and deeper moats. On the other hand, from a broader societal perspective, and particularly from the perspective of consumers, these moats often are harmful: they surround customers and deny them the opportunity to purchase from competitors. As a result, consumers suffer from the high prices and/or low quality imposed by the incumbent firm, whose incentives to provide the amount and type of innovation desired by consumers are decreased.