Explain in what sense antitrust policy might be misguided in network markets.

[bolbim33]

In markets with direct network externalities, is there a way to avoid market power while preserving network externalities in a single network? Give an example.

I'm hoping some of you tech people know about this kind of stuff cause I sure don't.

My homework is kinda hard. It's due tomorrow....so I need some help!!! THanks!!!

 

[bolbim33]

i don't feel the anandtech love!

 

[Jfur]

think about standards -- people value larger networks with more interconnections (e.g., Metcalfe's law/externalities). In telecoms, there are constant market changes, mergers, etc. That is just how our industry operates. Expansion is rewarded and NECESSARY because it captures economies of scale and externalities. Large incumbernts may actually try and prevent interconnections (e.g., the old AT&T) to maintain market power. If I understand your question, open standards would be one way to do this. For example, TCP/IP standards allow interconnection (i.e., a HUGE network) but do not necessarily consolidate market power as they are not proprietary. Many providers can use them to compete.

 

[Kadarin]

<< In markets with direct network externalities, is there a way to avoid market power while preserving network externalities in a single network? Give an example.

I'm hoping some of you tech people know about this kind of stuff cause I sure don't.

My homework is kinda hard. It's due tomorrow....so I need some help!!! THanks!!! >>



That isn't a tech question; it's a business/marketing question with a subtext focusing on how well you can remember buzzword terminology.