Market power in the new economy

It is cause for concern if sheer financial might is tool through which market dominance is achieved

We worry about rent-seeking behaviour in the old economy, and revere high-tech entrepreneurs. However, some high-tech companies have tried to obtain monopoly power through “network effects”. Once such a position is established, supernormal profits are produced at the expense of consumers. Some entrepreneurs and their financiers have taken to large-scale discounting in order to obtain a head start in capturing network effects. We need to broaden our concept of predatory pricing in competition law to grapple with these situations. This will require new work at the Competition Commission of India (CCI) and ultimately, new thinking about the Competition Act.

Innovation