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It Takes 2 to Tango: Competition Policy Analysis for 2-Sided Markets

By  |  December 24, 2015
It Takes 2 to Tango: Competition Policy Analysis for 2-Sided Markets

Two-sided markets is one of the hottest areas in economics and competition policy. Some businesses operate platforms that connect two groups of customers, help those customers interact, and in doing so create value. Economists and antitrust practitioners have known for a long time that advertising-supported media had two groups of customers: the readers and the advertisers. But only since 2000 have economists understood that having two groups of distinct customers is a common feature of many businesses, old and new, and that this feature has tremendous implications for the economics of these businesses. From shopping malls to computer-operating systems to payment schemes to search-based advertising, two-sided issues loom large.

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    It is now widely recognized by antitrust and economic scholars that analyzing competitive practices such as mergers and abuse of dominance in these two-sided industries requires special consideration. This course, by two of the leading contributors to the two-sided literature, will provide a basic introduction to two-sided markets and then show how the concepts can be applied for market definition and for analyzing monopolization and abuse of dominance cases.

    This course consists of the following three classes:

    2SM1A: The New Economics of 2-Sided Markets
    2SM1B: Market Definition & Market Power with 2 Customer Sides
    2BM1C: Analysis of Abuse & Monopolization in 2-Sided Markets

    Suggested Reading

    Evans, David S. and Schmalensee, Richard, The Industrial Organization of Markets with Two-sided Platforms, COMPETITION POLICY INTERNATIONAL, Volume 3, No. 1 (Spring 2007), available athttp://ssrn.com/abstract=786627.

    Evans, David S., Competition and Regulatory Policy for Multi-sided Platforms with Applications to the Web Economy (March 2008), available at http://ssrn.com/abstract=1090368.

    Evans, David S. and Schmalensee, Richard, Markets with Two-sided Platforms, ISSUES IN COMPETITION LAW AND POLICY (ABA Section of Antitrust Law), Vol. 1, Chapter 28 (2008), available athttp://ssrn.com/abstract=1094820.

    Evans, David S. and Noel, Michael D., Defining Markets that Involve Multi-sided Platform Businesses: An Empirical Framework with an Application to Google’s Purchase of Doubleclick,(Nov. 2007), available athttp://ssrn.com/abstract=1027933.

    Evans, David S., Competition and Regulatory Policy for Multi-sided Platforms with Applications to the Web Economy (March 2008) available at http://ssrn.com/abstract=1090368.

    Wright, Julian, One-sided Logic in Two-sided Markets, REVIEW OF NETWORK ECONOMICS, Vol. 3, Issue 1 (March 2004) available at: http://ssrn.com/abstract=459362.