The Tokenization of Consumer Surplus: New Antitrust Tools in Web3 Markets

Zero-price markets pose an interesting question for modern antitrust analysis. Central to this challenge is that modern antitrust law and economics is largely built on a foundation of industrial organization and price theory.  Applying these economic tools to zero-price markets, therefore, is tricky.  With the increasing prevalence of blockchain networks and Web3 applications, there may be opportunities to develop new methods and tools for unitizing (and thus measuring and comparing) value, even for “zero-price” goods. Certain blockchain applications – e.g. Decentralized Autonomous Organizations, Web3 games, and other participation- or patronage-driven online offerings – have unitized the value that users get out of the application and/or put into the application by their contributions in the form of tokens. This article discusses how these “social tokens” may make it easier to measure whether changes in the user experience are net positive or negative overall (and by how much).

By Kelly Fayne & Elise Nelson^[1]

I. INTRODUCTION

With the rise of the internet came the rise of “zero-price” markets, where firms set the price of their goods or services at $0. Indeed, zero-price markets are so pervasive in today’s economy that consumers expect to receive many things for “free” such as search, messaging, video and audio content, software, games, and a wide array of other applications. Of course, the provision of goods for free sti