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[G1]-PR11-Policy How Platforms Should (and Should Not) Be Regulated…
[G1]-PR11-Policy
How Platforms Should (and Should Not) Be Regulated
The regulatory challenge
Reworking old rule for a new world
an increasingly important social challenge
the need to design balancee internal governance system
external regulatory regimes to ensure operate fairly
it's time for
policymakers
legal scholars
to reexamine old assumptions about regulation
business advocate
platforms play a growing role
in the economy
in the social
issue about
the right of partcipants
on society as a whole
the impact of platform businesses on other sectors
political spheres
applied today's rapidly evoling platform markets
many observers are beginning to recognize much we "know" about regulatory policy is wrong
Regulation to prevent anti-competitive practices goes back at least as far as ancient Greece and Rome
the question is not whether,but precisely how
platform businesses should be covered by regulatory regimes
most vibrant economics have typicallly employed some intermediate level of
govenment regulation via oversight agencies
or some combination of the two
judicial review
Diankov
private orderings(private gonernence)
state ownership(socialism)
the platform revolution
many benefits that the explosive growth of network platforms in providing
the spread of platforms will not usher in some kind of new-economy nirvana
the rise of platforms has the potential for harm
it's not hard to understand
some complains come from the rise of platforms reflect the disruptive impact of platform business on traditional industries
when criticism comes from this
it should be taken with a grain of salt
dosen't mean that there are no legitimate complaints to be rasie about the impact of platform business
the dark side
externalities
when the cost of negative externalties is brone not by the people or companies that created them but not by "innocent bystanders"
who are stuck wiht the problem
a positive or
negative
consequence of an economic activity experienced by unrelated third parties.
i.e
MonkeyParking
the qusetion is how the social harm of privatizing a public resource outweighs the benefits of providing planned access to a scarce resource
Airbnb
Lack of consistent insurance coverage has been one of the most serous externality questions
the impacts of Airbnb on third parties uninvolved in the arrangement
Labor platform
the freelance/ 1099 economy
raise the social impact and equity
the caes against regulation
Roland Coase / George Stigler
regulatory capture
basic premise is that market participants will act to influence regulation in their own interests
often making the underlying market problems worse rather than better
government rules are often used to block competition and thwart innovation rather than to protect consumerss and benefit society
the phenomenon of regulatory capture sharply undercuts the claim to legitimancy of most economic regulation by governmnet
market failures are best addressed by market mechanisms themself
by encouraging the free growth of competitors who provide goods and services
that produce greater social benefits than their rivals
the evidence of history suggests
government regulators tend to be incompetent or corrupt
fails to solve the problems it is intended to address
where the free market fails to resolve
can be addressed by private litigation in the courts
Laffont / Tirole
it would be possible for firms to benefit from regulatory capture
if the principals involved had more complete information about
control over the behavior of their agents
Regulatory issues
National control of information assets
local content requirements regulations
Tax policy
Amazon
refusing to collect taxes
main street fairness act
marketplace fairness act
Data privacy and security
data
data-driven marketing
data ownership
Labor regulation
classify full-time, permanent employees as contract labor
Fair pricing
predatory pricing
Potential manipulation of cunsumers and markets
highly popular platforms can use their market power and their access to vast amounts of data to mislead people and manipulate their behavior without their knowledge or consent
Platform access
exclusion
Who benefits
whether it's fair and what its long-term impact on the overall marketplace is likely to be
play a role in platform campatibility
especially significant when network effects are strong
excess inertia
the power of network effects to slow or prevent the adoption of new,perhaps better techonogies
Platform access
exclusivity
platform compatibility
Regulation 2.0
accountability
goverrnment
hold people and platforms accountable for their behaviors after the fact
if platform's activities violate public expectations of safety and fair dealing, regulators can sanction or shout down these platform
consumer
hold people and platforms accountable for their behaviors after the fact
pick the safe and comfortable place for a night's stay
platform
platform like Uber can be granted freedom to operate in exchange for access to their data
open innovation tempered by data-driven transparency
consumer
make wiser choices
enforce high community standards of behavior
government
establish and enforce requirements for after-the-fact transparency
develop new systems for monitoring and regulating economic activity
Improve the quality of government agencies and amendments to existing statutory regulations
platform
encourage companies to improve the quality of their products
Advice for Regulator
Private governance
Protect the interest of companies
Not to maximize public wealth
None be counted
Heli Koski and Tobias Kretschmer,
Strong network effects generate market inefficiencies
public policy should be to minimize those
David S. Evans
three-step process to test for the desirability of government regulatory action
whether the governance system is mostly being used to reduce negative externalities
whether the anticompetitive behavior outweighs the positive benefits of the governance system.
examine whether has a functioning internal governance system
Government regulation
Safeguarding the interests of the general public
regulators are subject to capture
Low regulation in startup
penalize those that comply with the law
Regulators have a light touch in order to encourage innovation.
common goal
Regulation 1.0
gatekeeping
certification processes
prescriptive rules
common goal
foster fairness, security and safety
create trust
