policymakers demonstrate

12 Blundell, Cantillon, Chizzolini, Ivaldi, Leininger et al.
on fees (MasterCard) and resale price maintenance (RPM) rules (Swedish sport
nutrition products), to name a few.
This chapter shows that the policy-makers and courts take different stances
due to different views on how to solve these issues: motivating a discussion on
the difficult choices policy-makers now face between ex ante regulation (per
se prohibition) and ex post regulation (rule of reason). It discusses the EU’s
digital single market imitative and some of the economic challenges we are
facing on vertical relations and pricing. The IO literature offers both ‘old’ and
new “wisdom” as regards how we can deal with these issues, still the chapter
shows that there are both coexisting theories suggesting different outcomes
with regards to efficiency and welfare, and several open questions that need
answers. For instance, the way in which we are to deal with RPM rules are not
obvious, neither in the offline, nor in the digitalized economy. Although RPM
rules offer vertical related firms to facilitate pricing and increase competition,
they also sometimes facilitate collusion. Likewise, it is unclear that not allowing
any restrictions on cross-border online sales are enhancing welfare always
and in all cases.
The chapter surveys the new literature on competition and digitalized markets,
and clearly advocates more work. In particular, it shows that despite the
increased data availability from the online economy, very few empirical studies
exist. This is surprising since the theory typically generates ambiguous predictions
that depend on the size of the effects at play when it comes to show how
pricing arrangements affect equilibrium prices, profits and welfare.
Many of the issues that surface as important in ‘digitalized’ markets are also
evident in more traditional markets. However, the systematic presence of some
key new features like two-sidedness, cost structure and vertical pricing structures,
significantly modifies the nature of the models that should be used. Overall,
new research on this topic needs to balance the important central results
from the existing IO literature, even if reorganized and reinterpreted, against
new approaches required by the new features of the digitalized economy.
Chapter 6 deals with the problems of trade, globalization and development.
It is well understood that the fortune of workers, consumers, firms, regions
and countries increasingly depends on other regions and countries. This global
interdependence is driven by the flow of goods, capital, information, ideas and
people across them. An almost tautological conclusion of theory is that if countries
choose to interact with one another, they have to be better off than being
in isolation. While there are many quantifiable models to evaluate the gains
from trade, the welfare gains from global production sharing, either via arm’s
length global value chains or via multinational production, are less clearly
quantifiable. Better understanding how multinational firms operate is central
to comprehend and estimate their contribution to the costs and benefits of
globalization.