policymakers demonstrate

210 Nikolaos Vettas
this sense, copyrights and other forms of intellectual property protection
are essential for the functioning of many digital markets.
3. When selling nondigital products online, distribution and storage costs are
typically much lower than when selling through traditional ‘brick-andmortar’
stores.
4. Search costs for buyers, at least in reference to prices, can be much
lower than through traditional stores where a physical visit would be
required.
5. Distance (the ability to have contact only online) makes it difficult for buyers
to inspect some products, with respect to some important characteristics.
Therefore, asymmetric information may be high. Reputation and having
the trust of the buyers is essential for the success of any firm selling
online, often much more that a firm selling through traditional stores, where
physical inspection is possible.
6. When selling physical goods online, delivery will take some time; having
a large enough size that allows economies of scale and scope in delivery
could be important.
7. Online sellers could collect key data for their potential buyers, either by
tracing their past browsing and purchasing history, or from other sources.
These data may be valuable when designing pricing strategies, in particular
for price discrimination. Data collection and processing may often represent
a market opportunity in itself.
8. Significant privacy issues may be raised that may concern online buyers.
Personal data protection is important.
9. Services are often provided by multi-sided platforms. Size may play an
important role, and often competition for the market may be more relevant
than competition in the market.
10. Online and offline sale activities could be substitutes but also often complements.
We next briefly turn to the IO literature, which is important and relevant, even
when not produced only having competition policy in digital market issues in
mind. Subsequently, in Section 5.4, we review some work that has been motivated
by specific aspects of how competition policy should approach digital
markets.
5.3 Approaches in Industrial Organization
There are at least two important related literatures within IO that by their nature
are closely related to the currently open competition issues. These refer to the
study of vertical relations (integration and vertical restraints) and to pricing
practices, in particular, price discrimination and nonlinear pricing. We sketch