Francesco Ducci

Bio: Francesco Ducci is an academic researcher from New York University. The author has contributed to research in topics: Natural monopoly & Competition (economics). The author has an hindex of 6, co-authored 11 publications receiving 87 citations. Previous affiliations of Francesco Ducci include University of Toronto.

The Google search case in Europe: tying and the single monopoly profit theorem in two-sided markets

Abstract: This paper provides an economic and legal theory of harm applicable to the case against Google in Europe over search bias. So far, no clear legal and economic theory has yet been delineated by the European Commission, nor consensus in the literature has emerged with regard to the theory of foreclosure that could support the case, or with regard to the specific form of abuse of dominance applicable under European law. The paper shows that the law and economics of tying applies to search bias. From a legal standpoint, it is not necessary to rely on the more formalistic elements of Article 102 TFEU, or to characterize Google as an essential facility, in order to find a valid legal theory of harm. We show that Google’s conduct of linking its proprietary vertical (or specialized) search platforms to its horizontal (or general) search platform through visual prominence, as it has done with Google Shopping, fits within the legal boundaries of tying under European law. From an economic perspective, we show that the two-sided nature of both horizontal and vertical search provides compelling reasons why foreclosure of competition may be profitable, and why the single monopoly profit theorem may fail in this context. As we show in the paper, by tying vertical search to general search through visual prominence, Google can attract additional advertisers on its vertical search platform that would have possibly advertised on competing vertical search platforms without a tie. The effect of tying is a restriction on competition in vertical search that deserves antitrust scrutiny.

Natural Monopolies in Digital Platform Markets

Abstract: Competition policy debates on digital platform markets are often premised on the idea that market fragmentation and the standard forces of competition and entry may provide a potential solution to excessive concentration and market power. In this work, Francesco Ducci provides readers with a different perspective based on the theoretical lens of natural monopoly. Ducci explores this framework through the development of three case studies on horizontal search, e-commerce marketplaces, and ride-hailing platforms, investigating the strength and limit of potential (and often heterogeneous) sources of natural monopoly at play in each industry. Building on these case studies, the book then derives from the application of the natural monopoly framework general policy implications for digital industries by identifying the respective institutional flaws and shortcomings of ex ante and ex post approaches to market power as one of the central challenges in digital platform markets.

Digital platform ecosystems

Abstract: Digital platforms are an omnipresent phenomenon that challenges incumbents by changing how we consume and provide digital products and services. Whereas traditional firms create value within the boundaries of a company or a supply chain, digital platforms utilize an ecosystem of autonomous agents to co-create value. Scholars from various disciplines, such as economics, technology management, and information systems have taken different perspectives on digital platform ecosystems. In this Fundamentals article, we first synthesize research on digital platforms and digital platform ecosystems to provide a definition that integrates both concepts. Second, we use this definition to explain how different digital platform ecosystems vary according to three core building blocks: (1) platform ownership, (2) value-creating mechanisms, and (3) complementor autonomy. We conclude by giving an outlook on four overarching research areas that connect the building blocks: (1) technical properties and value creation; (2) complementor interaction with the ecosystem; (3) value capture; and (4) the make-or-join decision in digital platform ecosystems.

Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry

Abstract: In this paper we study mergers in two-sided industries. While mergers have been studied extensively in traditional industries, and there is a large and rapidly evolving literature on two-sided markets, there has been little work empirically examining mergers in these markets. We present a model that shows that mergers in two-sided markets may not necessarily lead to higher prices for either side of the market. We test our conclusions by examining a spate of mergers in the Canadian newspaper industry in the late 1990s. Specifically, we analyze prices for both circulation and advertising to try to understand the impact that these mergers had on consumer welfare. We find that greater concentration did not lead to higher prices for either newspaper subscribers or advertisers.

Horizontal Shareholding As An Antitrust Violation

Abstract: Horizontal shareholdings exist when a common set of investors own significant shares in corporations that are horizontal competitors in a product market. Economic models show that substantial horizontal shareholdings are likely to anticompetitively raise prices when the owned businesses compete in a concentrated market. Recent empirical work not only confirms this prediction, but also reveals that such horizontal shareholdings are omnipresent in our economy. I show that such horizontal shareholdings can help explain fundamental economic puzzles, including why corporate executives are rewarded for industry performance rather than individual corporate performance alone, why corporations have not used recent high profits to expand output and employment, and why economic inequality has risen in recent decades. I also show that stock acquisitions that create anticompetitive horizontal shareholdings are illegal under current antitrust law, and I recommend antitrust enforcement actions to undo them and their adverse economic effects.

Protecting Competition in the American Economy: Merger Control, Tech Titans, Labor Markets

Abstract: Accumulating evidence points to the need for more vigorous antitrust enforcement in the United States in three areas. First, stricter merger control is warranted in an economy where large, highly efficient and profitable “superstar” firms account for an increasing share of economic activity. Evidence from merger retrospectives further supports the conclusion that stricter merger control is needed. Second, greater vigilance is needed to prevent dominant firms, including the tech titans, from engaging in exclusionary conduct. The systematic shrinking of the scope of the Sherman Act by the Supreme Court over the past 40 years may make this difficult. Third, greater antitrust scrutiny should be given to the monopsony power of employers in labor markets.

Is Amazon the Next Google

Abstract: Dominant or apparently dominant internet platform increasingly become subject to both antitrust investigations and further-reaching political calls for regulation. While Google is currently in the focus of the discussion, the next candidate is already on the horizon – the ubiquitous online trading platform Amazon. Competitors and suppliers but also famous economists like Paul Krugman unite in criticizing Amazon’s market power and alleged abuse of it. In this paper, we collect the multitude of allegations against Amazon and categorize them according to types of potential anticompetitive conduct or types of market failure. We provide an economic analysis of these allegations based upon economic theory as well as publicly available information and data. As one of our main results, we find that the most severe allegations against Amazon do not hold from an economic perspective and, consequently, do not warrant regulation or other drastic interventions (like breaking the company up). However, several areas of conduct, in particular, the use of best price clauses and the (anti-) competitive interplay of Amazon and the major publishers in the e-book market require competition policy action. The standard antitrust instruments, enriched with modern economic theory, should suffice to disincentivize the identified anticompetitive conduct for now.