Transformation mechanism of network markets in digital era

TERRA ECONOMICUS, , Vol. 13 (no. 1),
p. 73-88

The article aims to demonstrate that the traditional approach to a network market, that is, investigation of escalation effect, with technological or demand network effect leading to the situation when a company or a platform needs to create the critical mass of users in order to become a leader in the market, being natural monopoly or oligopoly, is not sufficient for analysis of such markets in the digital era. New phenomena have arisen in technological, social and institutional spheres that created conditions for market structure evolution from natural monopoly towards more competitive fragmentized network market, where small actors with weak product differentiation have gained certain influence. The mechanism of network market transformation under the influence of technological, economic, financial and institutional factors of digitalization is revealed on the example of TV industry. It is concluded that a new type of network market configuration is being under formation. A big variety of strictly defined network markets within natural monopoly framework is being eroded and driven into a unified although amorphous market structure, with a multiple of different participants and stiff price competition. Such intense interaction within ICT industry has put forward new tasks before consumers, firms, banks and governments, and demands new theoretical reflections, including elaboration of new economic concepts.

Keywords: network market; telecommunications; commercial television; industrial organization; network economics

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Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606