Professor Alexandre de Cornière will defend his HDR on Friday 18 October at 11:00, by ZOOM
"Essays in Digital Economics and Competition Policy"
To attend the conference, please contact the secretariat Christelle Fotso Tatchum.
Memberships are:
Patrick Rey: Professor of Economics, University Toulouse Capitole - TSE
Bruno Jullien : Senior researcher CNRS - TSE
Volker NOCKE : Professor of Economics, University of Mannheim
Claire Chambolle :Senior researcher, INRAE/Paris Saclay
Giacomo CALZOLARI : Professor in Economics, European University Institute
Abstract
Within the area of digital economics, my research covers three main themes: platform strategies, the economics of data, and competition policy. These themes are obviously connected, and have experienced a remarkable surge in interest in recent years. Below I position my existing papers within each of these themes, and describe some of the avenues for further research that I am planning to pursue.
Platform strategies
Platform design. In my early work, I focused on the use of non-price strategies by platforms, which I refer to as platform design. In de Cornière (2016), and de Cornière and De Nijs (2016), I studied advertising platforms (search engine or ad exchange) and focused on the strategies manipulation of information about the match value between advertisers and consumers. In both papers, it can be optimal for the platform to prevent efficient information transmission so as to relax competition among advertisers (through different mechanisms) and extract the corresponding profit. In de Cornière and Taylor (2014; 2019), and de Cornière and Sarvary (2022), we consider the interactions between a dominant platform and third parties (web publishers) who are complements to the platform’s “core” functionality (search engine, social network) but substitutes to its “ancillary” services (integrated websites, user-generated content). Again, these papers emphasize the role of a non-price instrument, namely the recommendation algorithm, in shaping the interactions between the various players. An issue I would like to investigate concerns the management of innovation by platforms. A platform’s success depends in a large part on its ability to foster a dynamic ecosystem, and can it employ a variety of tools to this end. For instance, even though third parties may not be protected by intellectual property, a dominant platform acting as a gatekeeper may be in a position to guarantee that innovators receive appropriate compensation by granting more prominence to innovative products at the expense of “copycats”. Other instruments include the degree of openness of the platform, or the imposition of minimum quality standards.
Platform pricing. In de Cornière, Mantovani, and Shekhar (forthcoming), we study price discrimination strategies by a two-sided platform, motivated by commonly used practices by online marketplaces. We show that the existence of network externalities tends to make price discrimination more socially desirable than in traditional markets, and can even result in a Pareto improvement. The idea is that the ability to better monetize participation through price discrimination induces the platform to attract more users, which can benefit everyone if network effects are large enough.
Economics of data
In several of my papers I try to understand the role of personal data in the functioning of online markets. In de Cornière and De Nijs (2016), a platform has access to personal data about consumers, and decides whether to disclose this data to advertisers prior to an ad auction. Data is therefore used for targeted advertising. In de Cornière and Montes (2017), personal data is informative about consumers’ willingness to pay, and can be used for first-degree price discrimination and also for product improvement, and we show that under some circumstances firms may commit not to price discriminate so as to induce consumers to disclose more information. In de Cornière and Taylor (forthcoming[c]), we take a different approach and study a model that captures the variety of uses of data, from price discrimination to targeted advertising to product improvement. We shed light on a fundamental trade-off between a mark-up effect and a surplus extraction effect that determines whether data is pro or anticompetitive, that helps understanding the differing effects of data across a range of standard models. In de Cornière and Taylor (forthcoming), we study data-driven mergers, that is situations where a firm buys a target which sells an independent product, but which possesses data that can be used on the acquirer’s primary market. Such mergers, which are neither vertical nor horizontal, pose new challenges to competition authorities. By changing the way data is used, a merger changes the incentives to collect data, thereby affecting both the primary market (where data is collected) and the secondary one (where it is used). One insight that we obtain in the case of a monopolized primary market is that the desirability of the merger depends not only on whether data is pro or anticompetitive, but also on the existence of trade frictions regarding data.
Competition policy
Bundling & ecosystems. Following our work on self-preferencing, Greg Taylor and I started a research agenda on bundling in vertical relations: in de Cornière and Taylor (2021) we proposed a model motivated by the European Commission’s Android investigation, where bundling by an upstream firm deprives its upstream rivals from complementarities, and reduces their capacity to offer payments to the downstream distributors. In de Cornière and Taylor (forthcoming [a]), we show that the existence of downstream competition can upend the traditional Chicago School argument that anticompetitive bundling is not profitable. We have started two projects related to ecosystems. In the first one, an upstream firm at the center of an ecosystem bundles the technology solutions it offers so as to prevent downstream firms from differentiating themselves from their rivals through their choice of technology. This induces intense downstream competition, and increases the adoption of the ecosystem by consumers. We believe this to be a relevant dimension in the context of anti-fragmentation agreements that Google imposed on device manufacturers, and which were part of the European Commission’s Android decision. In the second one, we study how a firm can use product-specific complementarities within an ecosystem to introduce (or acquire) secondary products in order to protect its market power on a primary segment.
