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1 – 10 of over 5000Sukarmi Sukarmi, Kukuh Tejomurti and Udin Silalahi
This study aims to analyze the development of digital market characteristics particularly focusing on how the strategic choices of platforms are not fully reflected in pricing. In…
Abstract
Purpose
This study aims to analyze the development of digital market characteristics particularly focusing on how the strategic choices of platforms are not fully reflected in pricing. In addition, the implications for the development of theories of harm are investigated to explore the necessity of a relevant market definition in assessing infringement and evaluating the adequacy of Indonesian competition law.
Design/methodology/approach
This study is a legal analysis that uses statutory approaches, cases, comparative law and the development of theories of harm in digital mergers. The case approach is conducted by analyzing three cases decided by the Indonesia Business Competition Supervisory Commission. This approach provides insight into the response of Komisi Pengawas Persaingan Usaha concerning the merger and acquisition cases in the digital era as well as the provision of different analyses in conventional markets. However, competition can be potentially damaged in digital markets and a comparative law approach is taken by analyzing digital merger cases decided by authorities in other countries.
Findings
Results reveal that the digital market has created a “relevant market” that is challenging and blurred due to multi-sided network effects and consumer data usage characteristics. Platform-based enterprises’ prices fluctuate due to the digital market’s network effect and consumer data statistics. Smartphone prices depend on the number of apps and consumer data. Neoclassical theory focusing on product markets and location applied in Indonesia must be revised to establish a relevant digital economy market. To evaluate digital mergers, new harm theories are needed. The merger should also protect consumer data. Law Number 27 of 2022 on Personal Data Protection and Government Regulation on the Implementation of Electronic Systems and Transactions protects online consumers, a basic step in due diligence for digital mergers. The Indonesian Government should promptly strengthen the notion of “relevant markets” in the digital economy, which could lead to fair business competition violations like big data control. Notify partners or digital merger participants of the accessibility of sensitive data like transaction history and user location.
Originality/value
The development of digital market characteristics has implications for developing theories of harm in digital markets. Indonesian competition law needs to develop such theories of harm to analyze the potential for anticompetitive digital mergers in the digital economy era.
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David J. Teece and Henry J. Kahwaty
The European Union’s Digital Markets Act (DMA) calls for far-reaching changes to the way economic activity will occur in EU digital markets. Before its remedies are imposed, it is…
Abstract
The European Union’s Digital Markets Act (DMA) calls for far-reaching changes to the way economic activity will occur in EU digital markets. Before its remedies are imposed, it is critical to assess their impacts on individual markets, the digital sector, and the overall European economy. The European Commission (EC) released an Impact Assessment in support of the DMA that purports to evaluate it using cost/benefit analysis.
An economic evaluation of the DMA should consider its full impacts on dynamic competition. The Impact Assessment neither assesses the DMA's impact on dynamic competition in the digital economy nor evaluates the impacts of specific DMA prohibitions and obligations. Instead, it considers benefits in general and largely ignores costs. We study its benefit assessments and find they are based on highly inappropriate methodologies and assumptions. A cost/benefit study using inappropriate methodologies and largely ignoring costs cannot provide a sound policy assessment.
Instead of promoting dynamic competition between platforms, the DMA will likely reinforce existing market structures, ossify market boundaries, and stunt European innovation. The DMA is likely to chill R&D by encouraging free riding on the investments of others, which discourages making those investments. Avoiding harm to innovation is critical because innovation delivers large, positive spillover benefits, driving increases in productivity, employment, wages, and prosperity.
The DMA prioritizes static over dynamic competition, with the potential to harm the European economy. Given this, the Impact Assessment does not demonstrate that the DMA will be beneficial overall, and its implementation must be carefully tailored to alleviate or lessen its potential to harm Europe’s economic performance.
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Shatakshi Bourai, Rahul Arora and Neetu Yadav
The study aims to analyze factors impacting firms’ success and persistence in a digital platform competition using the structure-conduct-performance (SCP) framework. The study…
Abstract
Purpose
The study aims to analyze factors impacting firms’ success and persistence in a digital platform competition using the structure-conduct-performance (SCP) framework. The study also includes real-life cases that are beneficial to academicians and practitioners to understand and develop strategies for success and persistence during uncertainty.
Design/methodology/approach
A literature review to identify the factors that impact success and persistence in a digital platform competition was conducted following Webster and Watson (2002). Findings were integrated into a SCP framework to examine and understand the identified factors’ relational impact.
Findings
While analyzing factors under the SCP framework, all factors were divided into three categories: those impacting positively, those impacting negatively and those with ambiguous impact on the success and persistence in digital platform competition. Digital platform firms can exploit the positively impacting factors to increase market share by being distinctive from other digital platform firms and becoming dominant by withstanding competition. On the other hand, negatively impacting factors increase barriers to entry, intensify competition and reduce the distinctiveness of digital platform firms. Lastly, a few factors may have either a positive or a negative impact depending upon the particular characteristics of the firm/industry.
Research limitations/implications
The study opens the scope for future research on empirically testing the developed conceptual framework and relationships by developing propositions to posit the possible impact of these factors on digital platforms’ success and persistence.
Originality/value
The study contributed to the existing literature by using SCP framework to analyze the factors affecting firm’s success and persistence in a digital platform competition. Also, the study has discussed the relational impact of factors rather than their impact in isolation.
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While existing research explores the impact of audit market competition on audit fees and audit quality, there is limited investigation into how competition in the audit market…
Abstract
Purpose
While existing research explores the impact of audit market competition on audit fees and audit quality, there is limited investigation into how competition in the audit market influences auditors' writing style. This study examines the relationship between audit market competition and the readability of audit reports in Iran, where competition is particularly intense, especially among private audit firms.
Design/methodology/approach
The sample comprises 1,050 firm-year observations in Iran from 2012 to 2018. Readability measures, including the Fog index, Flesch-Reading-Ease (FRE) and Simple Measure of Gobbledygook (SMOG), are employed to assess the readability of auditors' reports. The Herfindahl–Hirschman Index (HHI) is utilized to measure audit market competition, with lower index values indicating higher auditor competition. The concentration measure is multiplied by −1 to obtain the competition measure (AudComp). Alternative readability measures, such as the Flesch–Kincaid (FK) and Automated Readability Index (ARI) are used in additional robustness tests. Data on textual features of audit reports, auditor characteristics and other control variables are manually collected from annual reports of firms listed on the Tehran Stock Exchange (TSE).
Findings
The regression analysis results indicate a significant and positive association between audit market competition and audit report readability. Furthermore, a stronger positive and significant association is observed among private audit firms, where competition is more intense compared to state audit firms. These findings remain robust when using alternative readability measures and other sensitivity checks. Additional analysis reveals that the positive effect of competition on audit report readability is more pronounced in situations where the auditor remains unchanged and the audit market size is small.
Originality/value
This paper expands the existing literature by examining the impact of audit market competition on audit report readability. It focuses on a unique audit market (Iran), where competition among audit firms is more intense than in developed countries due to the liberalization of the Iranian audit market in 2001 and the establishment of numerous private audit firms.
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Antonio Davola and Gianclaudio Malgieri
The attempt to establish a common European framework for core platforms' duties and responsibilities toward other actors in the digital environment is at the core of the recent…
Abstract
The attempt to establish a common European framework for core platforms' duties and responsibilities toward other actors in the digital environment is at the core of the recent scholarly debate surrounding the Digital Markets Act (DMA) proposal. In particular, the everlasting juxtaposition between the “data power” – as emerging from recent cases (Section 2) – that dominant tech companies enjoy and the concept of consumer sovereignty (Section 3) lies at the core of the proposal's attempt to identify digital core platforms as market gatekeepers. Accordingly, this chapter critically investigates the divide between power imbalance and consumer sovereignty in light of the architecture designed by the DMA, with a specific focus on its effectiveness in identifying gatekeepers' power drivers (Section 4). After highlighting the main critical aspects of the pertinent rules, opportunities for fruitful developments are then identified through the reframing of some of the notions considered in the proposal, and namely the role of “lock-in” effects and “data accumulation” (Section 5). Lastly, this chapter suggests that the DMA advancements – while desirable – are bound to be fragmentary in the absence of a wider appraisal of the nature of data power imbalance dynamics in the modern digital markets (Section 6).
Stefania Kollia and Athanasios A. Pallis
Container liner shipping companies started expanding their business by investing in container port terminals in the late 1990s. This market entry results in an extensive presence…
Abstract
Purpose
Container liner shipping companies started expanding their business by investing in container port terminals in the late 1990s. This market entry results in an extensive presence of vertically integrated liners and terminals. This study aims to explore the competition effects of this vertical integration trend based on a regional (European) analysis. In particular, it extracts lessons from the European Commission (EC) cases on the competition effects of vertical integration. The critical analysis of the cases examined at the institutional level intends to reach conclusions on whether liner–terminal vertical integration harmed or advanced competition in the relevant markets and/or the extent that there is a need to revise the current policy practices.
Design/methodology/approach
This study critically assesses the EC’s decisional practices in port container terminal vertical mergers in the last 25 years (1997–2021). Based on a literature review comparing maritime and competition economists' perspectives, it reviews the types of mergers examined, the methodology followed for relevant market definition and calculation of market shares and the estimated competition effects. The Hamburg–Le Havre area is the port range used as a case study for comparing the decisional practice with actual market developments. These container ports serve the greatest consuming market of final and intermediate goods in Europe and are gateways to Central and Eastern Europe.
Findings
The assessment identifies a need for expanding the investigation as a precondition for reaching conclusions on both the anti- and pro-competitive effects. First, only a limited number of transactions have been notified to the EC. Second, the empirical research identified a gap in this process, as there were no decisions (phase I) on vertical mergers between 2008 and 2016. Third, the exante assessment has not applied a phase II in-depth analysis to any case due to the absence of competition concerns. Finally, due to the absence of complaints, there is a lack of any ex post assessment of the effects of vertical integration.
Research limitations/implications
This assessment is important for understanding the current and emerging features of intra-port and inter-port competition and the potential effects that the continuation and expansion of liner companies' vertical integration strategies will have along maritime supply chains. It also contributes to the broader discussion on liner companies' strategies, such as the research and policy-making efforts around the globe to understand the impact of both vertical and horizontal integration.
Practical implications
These discussions are critical for a diversity of businesses that use liner shipping services or provide facilities and services to container shipping lines or ports. They are important for the interests of customers and consumers as they could inform any needed re-visiting of competition policy to protect from the dominance of any market developments that would lead to conditions limiting competition. Expanding analysis on the competition effects of non-notified mergers would help a better understanding of market changes.
Social implications
Enhancing competition and limiting monopolies is valuable from a consumer's perspective. This is more so in the case of maritime trade that serves the needs of societies. The study contributes by generating a better understanding of how decision-makers have worked towards that direction and what realignments are worthy.
Originality/value
There are no previous comprehensive reviews and analyses of the ways that policy-makers at the regional level have addressed the competition effects of vertical integration strategies of liner shipping companies when enhancing competition is valuable from a consumer perspective. Comparing maritime economists and competition, the study, via its literature review, also offers a comparison of maritime and competition perspectives on these competition effects, allowing positioning of how effective decisional-making practices have been.
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The paper empirically investigates the link between banking market structure and funding liquidity risk.
Abstract
Purpose
The paper empirically investigates the link between banking market structure and funding liquidity risk.
Design/methodology/approach
With a panel of Vietnamese commercial banks from 2007 to 2021, the system generalized method of moments (GMM) estimator is applied as the primary regression method, while the random-effect model and the corrected least square dummy variable (LSDVC) technique are also considered in robustness checks.
Findings
Competition may increase banks' funding liquidity risk. This finding holds for competition measures derived from the Boone index and concentration ratios but not in the case of the Lerner index as a proxy for market power. Further results indicate that the funding liquidity risk of banks that are larger and have better performance (less credit risk and higher return) tends to be less affected by competition. Besides, the overall impact of bank competition on funding liquidity risk is amplified by the financial crisis and the COVID-19 pandemic.
Originality/value
The study extends the empirical literature by exploring the relationship between bank competition and funding liquidity risk. Additionally, the paper also studies how the impact of bank competition on funding liquidity risk depends on the characteristics of the banking sector and the macroeconomic conditions of the economy, including the moderating effect of the COVID-19 pandemic.
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Hua Wang, Cuicui Wang and Yanle Xie
This paper considers carbon abatement in a competitive supply chain that is composed of a manufacturer and two retailers under vertical shareholding. The authors emphasize the…
Abstract
Purpose
This paper considers carbon abatement in a competitive supply chain that is composed of a manufacturer and two retailers under vertical shareholding. The authors emphasize the equilibrium decision problem of stakeholders under vertical shareholding and different power structures.
Design/methodology/approach
A game-theoretic approach was used to probe the influence of power structure and retailer competition on manufacturers' carbon abatement under vertical shareholding. The carbon abatement decisions, environmental imp4cacts (EIs) and social welfare (SW) of different scenarios under vertical shareholding are obtained.
Findings
The findings show that manufacturers are preferable to carbon abatement and capture optimal profits when shareholding is above a threshold under the retailer power equilibrium, but they may exert a worse negative impact on the environment. The dominant position of the held retailer is not always favorable to capturing the optimal SW and mitigating EIs. In addition, under the combined effect of competition level and shareholding, retailer power equilibrium scenarios are more favorable to improving SW and reducing EIs.
Originality/value
This paper inspects the combined influence of retailer competition and power structure on manufacturers' carbon abatement. Distinguishing from previous literature, the authors also consider the impact of vertical shareholding and consumer preferences. In addition, the authors analyze the SW and EIs in different scenarios.
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Shuchuan Hu, Qinghua Xia and Yi Xie
This study investigates firms' innovation behaviour under environmental change. Therefore, it examines the effect of trade disputes on corporate technological innovation and how…
Abstract
Purpose
This study investigates firms' innovation behaviour under environmental change. Therefore, it examines the effect of trade disputes on corporate technological innovation and how product market competition moderates this relationship.
Design/methodology/approach
This research tests the hypotheses using the fixed effects model based on panel data of publicly listed enterprises in China from 2007–2020.
Findings
The empirical results validate the positive association between trade disputes and corporate research and development (R&D) intensity as well as the U-shaped relationship between trade disputes and radical innovation. Additionally, the moderating effect of product market competition is verified: a concentrated market with less competition flattens the U-shaped curve of radical innovation induced by trade disputes; as the market becomes more concentrated and less competitive, the U-shaped relationship eventually turns into an inverted U.
Originality/value
First, this study contributes to the corporate innovation and trade dispute literature by expanding the environmental antecedents of technological innovation and the firm-level consequences of trade disputes. Second, this study enriches the theoretical framework of the environment–innovation link through an integrated perspective of contingency theory and dynamic capabilities view. Third, instead of the traditional linear mindset which had led to contradictory results, this study explores a curvilinear effect in the environment–innovation relationship.
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The purpose of this study is to explore the coopetition relationships between platform owners and complementors in complementary product markets. Drawing on the coopetition…
Abstract
Purpose
The purpose of this study is to explore the coopetition relationships between platform owners and complementors in complementary product markets. Drawing on the coopetition theory, the authors examined the evolutionary trends of the coopetition relationships between platform owners and complementors and explore the main influence factors.
Design/methodology/approach
The authors used Lotka–Volterra model to analyze the coopetition relationship between platform owners and complementors, including the evolutionary trends as well as the results. Considering the feasibility of sample data collection, simulation is used to verify the effects of different factors on the evolution of coopetition relationships.
Findings
The results show that there are four possible results of the competition in the complementary products market. That comprises “winner-take-all for platform owners,” “winner-take-all for complementors,” “stable competitive coexistence” and “unstable competitive coexistence,” where “stable competitive coexistence” is the optimal evolutionary state. Moreover, the results of competitive evolution are determined by innovation subjects’ interaction parameters. However, the natural growth rate, the initial market benefits of the two innovators and the overall benefits of the complementary product markets influence the time to reach a steady state.
Originality/value
The study provides new insights into the entry of platform owners into complementary markets, and the findings highlight the fact that in complementary product markets, platform owners and complementors should seek “competitive coexistence” rather than “winner-takes-all.” Moreover, the authors also enrich the coopetition theory by revealing the core factors that influence the evolution of coopetition relationships, which further enhance the analysis of the evolutionary process of coopetition relationships.
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