Zero Price, Zero Competition: How Marketization Fixes Anticompetitive Tying in Monetized Markets

Abstract

This paper expands on an idea recently voiced by neo-Brandeisians and formally modelled by economists in the past two decades – namely, that the Chicago School’s arguments for the harmless and efficiency generating nature of vertical integration do not apply on zero-priced monetized markets. We build on these findings by developing a non-formal, incentive-based theoretical model that shows how the non-interventionist Chicago School approach leads towards irreversible market failure. We propose marketization as a solution to this conundrum – a structure whereby consumer activity on zero-priced markets and its subsequent monetization are no longer in the hands of the same company. Instead, marketization introduces competition by allowing the consumer to choose how and by whom to be monetized. Lastly, we proceed to examining the potential for eventual policy implementation of marketization through the recent Commission proposal for a Digital Markets Act.