EU Science Hub

Economics of the Digital Single Market

Online services trade in the EU Digital Single Market

The creation of a borderless Single Market for trade in goods, services, capital and labour has been a major objective ever since the start of the EU. This objective has been extended to online markets and the achievement of a borderless Digital Single Market has become a policy priority for the current European Commission.

Although distance should in principle not play a significant role in online markets, all kinds of barriers may still hamper consumer access to online services in other countries, as well as to firms' access to consumers in different member states. The EU seeks to eliminate these barriers.

This research has several objectives:

  1. Data collection: In the absence of official statistics, the volume of online domestic and cross-border trade in services – both monetized and “free” online services – has to be estimated, using a variety of data sources.
  2. Economic analysis:  We use econometric analysis to estimate the impact of cultural, geographical, regulatory and commercial barriers to online services delivery in the EU on the welfare of consumers and producers.
  3. Policy advice:  We assist the European Commission in the design of policy measures that can contribute to reducing obstacles to online cross-border trade

The project has produced a number of studies on the drivers and impediments to cross-border e-commerce in the EU, and on supply-side barriers and the macro-economic impact of cross-border e-commerce, and more specific issues such as geo-blocking access to online content. In addition, research on the role of digital platforms and data-related issues is also at the core of the project's activities.

Online Platforms and Regulatory challenges

Most offline firms now have an online presence and many sell their goods and services through online distribution channels, either directly or through third-party platforms. A particular feature of the digital economy is the rise in platforms or multi-sided markets where buyers, sellers, advertisers, software and hardware developers, etc. can come together and find matching parties for an exchange.

Platforms reduce search costs and enable users on different sides of the market to reach a much wider variety of supply. They generate substantial economic benefits.  However, their capacity to collect, analyse and use vast amounts of data also triggers concerns among users and calls for regulatory intervention.

The European Commission is undertaking an assessment of the economic role and contribution of online platforms and possible market failures and regulatory issues that may arise in this context.  Attention will be paid to the use of personal and business data in platforms, including in search rankings.  It will also investigate risks and intermediary liabilities and how platforms respond to these with improved institutional settings that constitute forms of self-regulation.

There is a lot of research activity on platform markets. Most of this is carried out from a business perspective, less so from a public policy perspective. This research aims to contribute to a public policy perspective on platforms.   

The main objectives of the JRC's current research in this area are:

  • To get a better insight in the economic and data mechanisms that drive platforms and how this affects market structures
  • To carry out a number of empirical case studies to complement gaps in the available research literature, with a particular emphasis on the social welfare implications of platform behaviour.

This project will produce a number of studies that review the economic literature on platforms and data analysis and examine the regulatory issues that arise in this context. It will include some empirical case studies of the interaction between platforms and their users.

Digital Media

Digital technology and the internet have caused a very substantial reduction in production and distribution costs for digital media such as music, film, books and news. It has vastly increased supply and accessibility of media products for consumers. At the same time, it affects business models and revenue streams for artists and media producers. Despite a rapid shift to online distribution, cross-border may still be difficult in EU media markets because legal and commercial market fragmentation across countries.

The European Commission has started a revision of EU Directives related to copyright and audio-visual media in order to adapt the regulatory setting to these new technologies. The public debate on copyright is marked by the absence of empirical evidence. This research looks at media and cultural industries from an empirical economics perspective and aims to fill major gaps in the empirical evidence, thereby contributing to a more constructive debate. 

The main objectives of this research are:

  • To investigate the patterns of cross-border availability and accessibility of digital media in the EU and to examine the impact of different sources of geographical market fragmentation on consumer and producer welfare.
  • To estimate the impact of new digital media distribution platforms and business models on the production of creative media works, cross-border access and availability to media and consumer and producer welfare.