TILEC Work in Progress: Jasper van den Boom
Title: Progressive Ecosystem Regulation – A proposal on regulating competition between ecosystems in the digital network industries
Abstract
This presentation is on my PhD-thesis, which develops a regulatory framework focused on stimulating ecosystem competition. The thesis consists of three parts, called the competitors, the competition and the regulation. The first part makes a comparison between non-digital and digital network industries. Here, the discussion focuses on how digital markets operate as part of a larger network and it explains why the development of platform- and ecosystem strategies is so common in digital markets. It concludes by considering that digital platforms may constitute natural monopolies, but that competition at the ecosystem level may still create competitive constraints on these monopolists. In part 2, the thesis discusses the dynamics of ecosystem competition and identifies four phases of ecosystem competition: (1) competition for a platform market; (2) expansion into a multi-product ecosystem; (3) ecosystem mature; and (4) ecosystem incumbency. It then sets out theories of harm, arguing that competitive harms in the digital network arise with the existence of a small group of incumbent ecosystem operators. The third part of the thesis sets out a novel regulatory system named progressive ecosystem regulation. Its objectives are stimulate competition in the digital network by facilitating entry and disruptive innovation. The thesis proposes the creation of three regulatory pools: heavily regulated, lightly regulated and entrant. Regulation within a pool is governed by general competition law, while the regulatory obligations govern interactions between pools. The thesis argues that this stimulates entry and protects potential disruptors, while minimizing unintended side-effects between players that are in an equal position. This regulatory framework is developed drawing lessons from regulation in non-digital network industries, and the thesis compares Progressive Ecosystem Regulation to existing regulation or regulatory proposals to highlight the benefits of this novel system.