OPINIONISTA: The c-word – Is competition between business models always good?

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The winner-take-all nature of digital markets means that dominant firms charging a zero price to consumers can maintain large-scale lossmaking operations for many years. This makes it difficult, if not impossible, for start-ups with other business models, such as one based on subscriptions, to grow to sustainable scale.

the public service broadcaster Channel 4 will strengthen its ability to compete against global streaming services such as Netflix and Amazon Prime. In fact, Channel 4 – which is publicly owned but commercially funded – is already competing against them very effectively and isFor Dorries, competition means boosting another large private sector media firm that might buy Channel 4, such as Disney.

The same issues arise in the United Kingdom’s retail banking sector. All the high-street banks are trapped in a model of charge-free current accounts, which they must cross-subsidise by overcharging for other services such as overdrafts. UK competition regulators have never plucked up the resolve to insist on a different business model, and no single bank dares to diverge from it.

 

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Professor of Public Policy at the University of Cambridge. She is not an economist.

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