“I also want to congratulate the Management School at Monash University for organizing such a fantastic event. I’m thrilled that Joshua Gans has agreed to join us. Joshua, who once worked at the University of Sydney, is currently employed by the University of Toronto. Although we have written nine journal papers together and a book, we have never spoken at the same conference. So I want to thank the organizers for letting Joshua and I cross that off our academic bucket lists,” said Dr Andrew Leigh, a member of parliament and Australia’s assistant minister for competition, charities, and the Treasury.
“I also acknowledge the efforts of Michael Brennan, Chair of the Productivity Commission, and Gina Cass-Gottlieb, the chair of Competition and Consumer Commission in Australia.
The most recent interim report on digital platform services (ACCC 2022) contains suggestions from the Australian Competition and Consumer Commission, which the Treasurer, Assistant Treasurer, and I are currently evaluating.
Australia has a well-managed system of competition regulation. Still, it needs to change to keep up with the evolving nature of the business environment, according to the Productivity Commission’s 5-year Productivity Inquiry final report, released today. This vital piece of Australian policy analysis is presented here. It contains about 1000 pages. There are more than 70 proposals made in its nine volumes, which cover all levels of Government.
In related work, the Australian Government recently surveyed to determine if internet booking services prevent travel and lodging businesses from choosing their prices.
The GovernmentGovernment is considering the conclusions and suggestions of the Treasury’s review of the News Media and Digital Platforms Bargaining Code.
The House Economics Committee has recently begun an investigation into “enhancing economic dynamism, competitiveness, and firm development,” which is skillfully presided over by Monash economist turned legislator Daniel Mulino. This research on the reduction in dynamism is expected to be significant and comprehensive, and it will undoubtedly explore how competition law should adapt to the digital age.
A sizable corpus of study is being done to assist us in better comprehending digital challenges and taking advantage of the opportunities. Only some administrations are following in our footsteps.
Around the world, concerns have been expressed regarding whether consumer and competitive settings are adequate in light of the continuous expansion of digital platforms.
First, governments want to know how to guarantee that the benefits of innovation are more significant and more widespread.
And second, how can we set up the proper regulatory safeguards to prevent this?
I want to look at a few of those difficulties today.
Digital revolution citizens
Technological development has pushed change throughout human history, but the digital revolution’s scope and pace have brought change on a scale never before seen. It can be found in our homes, offices, and schools.
We virtually always have access to the technology that makes it possible, either in our hands or occasionally in our pockets.
As digital citizens, we might get out of bed and instantly unplug our iPhones from the charger on a regular morning.
We might search Facebook or Instagram for social and popular news while sporting groggy eyes and bed hair with minor in common with our profile pictures.
Before determining whether to bring an umbrella, we could perform a Google search or ask for a weather report. In Melbourne, the response is invariably affirmative.
Monash-Dean-turned-Productivity-Commissioner, None of this was imaginable thirty years ago, as Stephen King so eloquently puts it (King 2022).
There is no denying that digital technology has improved our lives in ways that were difficult to imagine in earlier generations. But there’s a problem, or it could be called a glitch.
The previously described digital interactions entail using platforms that account for more than 50% of the market.
In Australia, nearly 60% of mobile phones ran Apple’s iOS operating system in 2022. (Statcounter 2023). Hence, almost 60% of program downloads came from the Apple App Store
So, give that another thought. You use platforms with over half the market when you use Apple phones, Google search, and Meta social networking. These businesses have a lot of influence over both customers and rivals.
Companies that control specific economic sectors and those that are extremely powerful are familiar concepts.
Nonetheless, certain digital corporations experience an unprecedented lack of competition due to market concentration’s extent, scope, and scale.
In the past year, I’ve given five significant talks on economic dynamism and competition.
I presented new data on the deterioration of market dynamism in the Gruen Lecture at the Australian National University.
The rate of the new business start-up has decreased in recent decades. Market monopolization has increased. In a generation, the top corporations on the Australian stock market hardly altered.
I discussed three historical instances where countries had seen significant increases in economic productivity due to competition reform in the Warren Hogan Lecture at the University of Sydney.
They included Canada’s 1985 competition reforms, Germany’s post-war dissolution of industrial juggernaut IG Farben, the US Sherman Act and aggressive enforcement of competition rules under Teddy Roosevelt.
I spoke about the competition reforms initiated by Fred Hilmer and Paul Keating, which resulted in the elimination of anti-competitive regulations, the development of a national electricity market, and the prioritization of competition among governments, at a Sydney Ideas talk commemorating the 30th anniversary of the Hilmer reforms.
The adjustments were a factor in the productivity boom of the 1990s. According to one estimate, this results in a $5,000 annual gain for the ordinary Australian household.
I looked into price markups at the Sydney Institute and found that the difference between a company’s manufacturing cost and the amount it charges has increased over time.
This conclusion, particularly pertinent when global inflation is increasing, is remarkably consistent with the development in market concentration.
Also, I discussed the evidence on monopsony power at a Per Capita event in Melbourne, which implies that increased employer control is one of the causes constraining wage rise. Monopsony power harms employees in the same way that it does consumers.
