The Two-Sided Market Literature Enriches Traditional Antitrust Analysis

David Park, William Rooney, Apr 19, 2007

The term two-sided market sounds strange to the antitrust lawyer´s ear. Antitrust markets typically are not described as having sides. They consist of a relevant product or set of products, cover a geographic area, and include transactions between buyers and sellers at a particular level of distribution. Although most market participants buy inputs and sell outputs, they usually buy in the market for the input and sell in the market for the output, not compete in a two-sided market. Still, the growing and informative literature on two-sided platforms, businesses, and markets has much to offer antitrust law. That literature emphasizes that the demand for otherwise distinct products or services may in fact be linked and that a competitive-effects analysis cannot myopically ignore that linkage. To the extent that the two-sided market literature improves competitive-effects analysis, it improves the fundamental purpose of antitrust law. This essay briefly discusses the importance of acknowledging linked demand for, and relationships among, otherwise distinct products or services, as recommended by the two-sided market literature, with respect to competitive-effects assessments and market definition. We also observe that recognizing linked demand and interrelationships among products or services facilitates the application of legal rules in antitrust cases.