Where does a firm end and a market begin?
This existential query is discussed by Bruce Owen in “Antitrust and Vertical Integration in ‘New Economy’ Industries” released today by TPI.
Referring to Adam Smith’s analogy of division of labor in 18th century pin-making, Bruce illustrates how vertical integration is inherent in all firms, and therefore cannot be viewed on its own as a predictor of market problems.
So what is the take-away for regulators regarding tech and media policy?
As Owen so eloquently explains: “Toadying to uninformed populist fears of vertical integration between network providers and content creators by imposing investment-dampening ex ante regulatory constraints is likely to be far less useful to the public than steps to ensure effective competition among network providers.”