Regulating innovation in the digital age: towards a demand-conscious regulatory paradigm

This thesis contributes to the debate over the role, impact, and limitations of regulation as a tool for shaping innovative markets. This contribution delineates the issues that arise at the intersection of innovation that takes place in the markets and regulatory intervention in such markets prompted by the dual objective of removing existing inefficiencies in the functioning of the markets, and of facilitating further innovation. The specific foci of the thesis are the concerns arising from the demand-side of the market, notably consumer choice and decision-making. This emphasis on the demand-side is prompted by the changing role of consumers within the process of innovation in the realm of digital and data-driven economy, the regulatory implications of which are currently underexplored in the legal scholarship. The premises for the problematics addressed in this thesis are twofold: the first concerns the presumption of markets’ efficiency in delivering welfare-enhancing innovation as the outcome of the supply-side market mechanism, notably market competition; the second stems from the role of regulation as a value-free tool for facilitating innovation by removing supply-side obstacles. Although policy papers, impact assessments and legislative proposals dazzle with references to ‘more and better choice’ for consumers by means of more innovation, no substantive and systematic analysis of the impact of innovation on consumer welfare is undertaken. Welfare-enhancing effects are largely assumed, following ‘the more, the better’ approach as a paragon for market efficiency. However, such approach to regulating innovation is only seemingly value-free and instead diverts the innovation and market shaping function from regulation to market forces. This thesis argues that the current approach is suboptimal in the context of digital innovation and attempts to make the first steps towards a more demand-conscious approach to regulation.