Axel Gautier

Digital Platforms in Competition with Vertically Integrated Incumbents

Platforms or matchmakers compete with vertically integrated incumbents in many sectors: Uber competing with taxi companies and AirBnB competing with hotels are two preeminent examples. In a current research project, Axel Gautier and his collaborators are modeling the process of competition between a platform and a vertically integrated incumbent. A striking feature is that the platform competes at two levels. Firstly, the platform competes for the market to affiliate users to the platform. Affiliation is not only a way to gain market shares but also to reduce costs as platforms exhibit strong economies of scales. Secondly, the platform competes in the market with the incumbent for service provision to the affiliated customers. The researchers construct a dynamic model that integrates these two levels of competition, studying the long run equilibrium and the transition to the long-run equilibrium. They show that this two-stage process can lead to prices below costs at the early stage of the platform development. They also study market consolidation during the transition phase.

Axel Gautier’s research is in the field of industrial economics. His current focus is on digital platforms, industry regulations, and competition policy, and he actively contributes to the literature in these fields. In recent years, he has worked on topics such as energy markets, net neutrality, mergers in the digital economy, and competition between platforms.

Axel Gautier is a full Professor at the Department of Economics of HEC Liège, University of Liège. He obtained his PhD in economics from the Université catholique de Louvain. He previously worked as a research associate at the University of Bonn and at the University St-Louis in Brussels. His articles have appeared in journals such as European Economic Review, Economic Theory, the Journal of Regulatory Economics, the Scandinavian Journal of Economics and the International Journal of Industrial Organization. He has managed several important research projects: “Beyond incentives regulation,” financed by the FNRS, “Competition and Innovation,” financed by the University of Liège and “Energy transition: consumers and network,” financed by the Walloon region, and he is currently involved in an ARC project on digital platforms. Mr. Gautier is co-founder and co-director of the LCII (Liège Competition and Innovation Institute) as well as a CESifo Research Network Fellow.