Monopoly Power in the Electronic Information Industry: Why, and So What?


This "law and economics" article diagnoses why monopoly power infects so many markets in the electronic media, communications, and information technology industries (collectively the "Industry"),and recommends changes to prevailing intellectual property and antitrust doctrines to remedy this problem.

The analysis focuses on a single "norm" -- the maximization of economic value, as defined by standard welfare economic theory. Identifying three distinct functions that operate throughout this otherwise diverse Industry -- authoring, publishing, and distribution -- the article notes that two economic peculiarities characterize most Industry markets: the technical feasibility of "non-rivalrous use" of digitized information products, and the frequent "creative destruction" of Industry markets by new technologies and business methods.

Using these concepts, the article argues that, while concern surrounding "media megamergers" is overwrought, certain public policies do significantly constrain economic value creation in the Industry. The article proposes reforming several major legal doctrines and public policies to loosen these constraints, e.g.: (a) reduce the "over recognition" of copyrights and patents, (b) cease the "over enclosure: of the radio spectrum, (c) challenge more frequently "nationalizing" mergers among local/regional distribution network monopolies, (d) aggressively promote "open standards" for interconnecting networks and software platforms, and (e) simplify antitrust rules against the cross-market leveraging of monopoly power, including a ban on dominant distribution companies engaging in preferential self-dealing in related markets.

The article concedes that such reforms, though also satisfying many "non-economic" norms, would meet stout political resistance from established Industry firms.


Antitrust and Trade Regulation | Communications Law | Computer Law | Economics | Intellectual Property Law | Science and Technology Law

Date of this Version

July 2003