Essays on the Tragedy of the Anticommons in Complementary-Good Markets

Recently, a considerable amount of attention has been devoted to a specific class of market distortions, known as "the tragedy of the anticommons". Based on Cournot's "complementary monopoly", such literature argues that social welfare might be better served by policies favoring integration. In fact, when complementary goods are sold by different firms, prices are higher than those set by a monopoly selling all the complementary goods. A merger would then yield a higher consumer surplus. While the resulting social welfare may fall short of the perfectly competitive one, a merger might represent a second best solution. Strictly speaking, this literature is applicable only to situations in which the markets for all complementary goods are monopolies. This dissertation verifies the robustness of such result under different market structures and degrees of product differentiation. Particularly, it concludes that the extent to which public policies should combat an anticommons is actually quite limited when the broader market environment in which industries exist is taken into account.;In Chapter 1, we consider two complementary goods forming a system and we introduce oligopolistic competition first for one and then for both complements. Particularly, we show that competition in only one of the two markets may be welfare superior to an integrated monopoly if and only if the substitutes differ in their quality so that, as their number increases, average quality and/or quality variance increases. Then, absent an adequate level of product differentiation, favoring competition in some sectors while leaving monopolies in others may be detrimental for consumers and producers alike. Instead, competition in both markets may be welfare superior if goods are close substitutes and their number in each market is sufficiently high, no matter the degree of product differentiation.;In Chapter 2, we discuss the implicit suggestion of the "tragedy", according to which producers of complementary goods should always integrate themselves. In fact, recent decisions by antitrust authorities rather indicate that the tradeoff between the "tragedy" and the lack of competition characterizing an integrated market structure should be more carefully analyzed, and that integration should be allowed only when the former becomes a more serious problem than the latter. We analyze such tradeoff in oligopolistic complementary markets, when products are vertically differentiated. We show that quality leadership plays a crucial role. When there is a quality leader, forcing divestitures or prohibiting mergers, thus increasing competition, lowers prices and enhances consumer surplus. However, when quality leadership is shared, "disintegrating" firms may indeed lead to higher prices. Then, only in this second case concerns about the tragedy of the anticommons seem to be well posed in antitrust decisions.;In Chapter 3, we analyze the impact of the "tragedy" on entry decisions. Particularly, we show that allowing firms to enter a complementary-good market and then sell all components of a composite good may be both welfare-enhancing and pro-competitive. In fact, such strategy may favor the entry of new firms producing lower-quality components in the original market. In other terms, "selling the whole package" may increase consumer surplus, even when the composite good is sold as a bundle only. Interestingly, notwithstanding the subsequent increase in competition, it is always optimal for firms to enter a complementary-good market. By discouraging such practices, then, antitrust authorities may harm both consumers and low-quality firms, at the same time undermining market stability.