ON-TOPIC: USA - EUROPEAN UNION - COMPETITION POLICY - EFFECTS - ONLINE AND OFFLINE DISTRIBUTION - PLATFORMS - CONSUMER BENEFITS - ECONOMIC EFFICIENCY

Online and Offline Retailer Competition: New challenges for Competition Economists and Practitioners

In this On-Topic we explore a number of competition issues that arise at the intersection of online and offline retail distribution. We first provide a brief overview of the effects of online distribution and the associated potential challenges for competition policy. In the first paper, we present a framework for the economic modelling of competition between online and offline retailers. Using this framework, we analyse some salient features of that competition and discuss how the framework can be used in the context of antitrust analysis. In the second paper, we discuss the tools that economists use to evaluate mergers of competing retailers, and how those tools are changing in practice due to the increasing importance of online competition. We summarize recent decisions by competition authorities in Europe and the US, and describe how enforcers have used those tools to arrive at those decisions. Finally, in the third paper, we consider platforms, and in particular digital comparison tools. We explain some of the consumer benefits and efficiencies that they may bring about, while also setting out some of the potential competition concerns that some of their practices may raise under certain conditions. And we highlight the need for an international consensus on some key enforcement issues.

Introduction [1] Antoine Chapsal Principal, Analysis Group, Brussels/Paris 1. E-commerce platforms have decisively reshaped the retail distribution landscape. The exhibit costs and business models associated with these platforms carry many potential advantages relative to physical stores, and they have diminished the roles of, or in some cases removed entirely, links in the supply chain. This has resulted in lower distribution costs, along with a lower fixed-cost structure. Furthermore, online retail operators can offer a greater variety of products for sale: online book retailers, for instance, offer 23 times as many titles as a typical physical Barnes & Noble store. [2] Finally, e-commerce platforms and digital comparison tools (DCTs) tend to reduce consumer search costs,

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Antoine Chapsal, Claudio Calcagno, Joshua White, Aaron Fix, Emily Cotton, Nikita Piankov, Online and Offline Retailer Competition: New challenges for Competition Economists and Practitioners, September 2018, Concurrences Review N° 3-2018, Art. N° 87502, www.concurrences.com

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