IDEAS home Printed from https://ideas.repec.org/a/oup/jcomle/v10y2014i2p293-339..html
   My bibliography  Save this article

Market Definition In Two-Sided Markets: Theory And Practice

Author

Listed:
  • Lapo Filistrucchi
  • Damien Geradin
  • Eric van Damme
  • Pauline Affeldt

Abstract

Drawing from the economics of two-sided markets, we provide suggestions for the definition of the relevant market in cases involving two-sided platforms, such as media outlets, online intermediaries, payment cards companies, and auction houses. We also discuss when a one-sided approach may be harmless and when instead it can potentially lead to a wrong decision. We then show that the current practice of market definition in two-sided markets is only in part consistent with the above suggestions. Divergence between our suggestions and practice is due to the failure to fully incorporate the lessons from the economic theory of two-sided markets, to the desire to be consistent with previous practice, and to the higher data requirements and the higher complexity of empirical analysis in cases involving two-sided platforms. In particular, competition authorities have failed to recognize the crucial difference between two-sided transaction and non-transaction markets and have been misled by the traditional argument that where there is no price, there is no market.

Suggested Citation

  • Lapo Filistrucchi & Damien Geradin & Eric van Damme & Pauline Affeldt, 2014. "Market Definition In Two-Sided Markets: Theory And Practice," Journal of Competition Law and Economics, Oxford University Press, vol. 10(2), pages 293-339.
    • Handle: RePEc:oup:jcomle:v:10:y:2014:i:2:p:293-339.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/joclec/nhu007
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jean-Charles Rochet & Jean Tirole, 2002. "Cooperation Among Competitors: Some Economics Of Payment Card Associations," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 549-570, Winter.
    2. Elena Argentesi & Lapo Filistrucchi, 2007. "Estimating market power in a two-sided market: The case of newspapers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1247-1266.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oliver Budzinski & Annika Stöhr, 2019. "Competition policy reform in Europe and Germany – institutional change in the light of digitization," European Competition Journal, Taylor & Francis Journals, vol. 15(1), pages 15-54, January.
    2. Affeldt, P. & Argentesi, E. & Filistrucchi, Lapo, 2021. "Estimating Demand with Multi-Homing in Two-Sided Markets," Other publications TiSEM 1317bf39-d02e-4f61-a34f-e, Tilburg University, School of Economics and Management.
    3. Andre Boik, 2016. "Intermediaries in Two-Sided Markets: An Empirical Analysis of the US Cable Television Industry," American Economic Journal: Microeconomics, American Economic Association, vol. 8(1), pages 256-282, February.
    4. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    5. Stefan Behringer & Lapo Filistrucchi, 2015. "Areeda–Turner in Two-Sided Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 46(3), pages 287-306, May.
    6. Ivaldi, Marc & Sokullu, Senay & Toru, Tuba, 2015. "Airport Prices in a Two-Sided Market Setting: Major US Airports," CEPR Discussion Papers 10658, C.E.P.R. Discussion Papers.
    7. Filistrucchi, L. & Gerardin, D. & van Damme, E.E.C. & Keunen, S. & Klein, T.J. & Michielsen, T.O. & Wileur, J., 2010. "Mergers in Two-Sided Markets - A Report to the NMa," Other publications TiSEM f901d1fe-8878-444e-a685-8, Tilburg University, School of Economics and Management.
    8. Lapo Filistrucchi & Damien Geradin & Eric van Damme, 2012. "Identifying Two-Sided Markets," Working Papers - Economics wp2012_01.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    9. Baranes, Edmond & Cortade, Thomas & Cosnita-Langlais, Andreea, 2019. "Horizontal mergers on platform markets: cost savings v. cross-group network effects?," MPRA Paper 97459, University Library of Munich, Germany.
    10. Wang, Jin, 2021. "Do birds of a feather flock together? Platform’s quality screening and end-users’ choices theory and empirical study of online trading platforms," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    11. Fumiko Hayashi, 2009. "Do U.S. consumers really benefit from payment card rewards?," Economic Review, Federal Reserve Bank of Kansas City, vol. 94(Q I), pages 37-63.
    12. Magnus Willesson, 2009. "Pricing of card payment services in Scandinavian banking," The Service Industries Journal, Taylor & Francis Journals, vol. 29(3), pages 387-399, March.
    13. Mark D. Manuszak & Krzysztof Wozniak, 2017. "The Impact of Price Controls in Two-sided Markets : Evidence from US Debit Card Interchange Fee Regulation," Finance and Economics Discussion Series 2017-074, Board of Governors of the Federal Reserve System (U.S.).
    14. Scholnick, Barry & Massoud, Nadia & Saunders, Anthony & Carbo-Valverde, Santiago & Rodríguez-Fernández, Francisco, 2008. "The economics of credit cards, debit cards and ATMs: A survey and some new evidence," Journal of Banking & Finance, Elsevier, vol. 32(8), pages 1468-1483, August.
    15. Marc Ivaldi & Catherine Muller-Vibes, 2018. "The differentiated effect of advertising on readership: evidence from a two-sided market approach," Marketing Letters, Springer, vol. 29(3), pages 363-376, September.
    16. David S. Evans & Richard Schmalensee, 2005. "The economics of interchange fees and their regulation : an overview," Proceedings – Payments System Research Conferences, Federal Reserve Bank of Kansas City, issue May, pages 73-120.
    17. Howell, Bronwyn, 2006. "Unveiling 'Invisible Hands': Two-Sided Platforms in Health Care Markets," Working Paper Series 3841, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    18. Xing Wan & Javier Cenamor & Jing Chen, 2017. "Exploring Performance Determinants of China’s Cable Operators and OTT Service Providers in the Era of Digital Convergence—From the Perspective of an Industry Platform," Sustainability, MDPI, vol. 9(12), pages 1-19, December.
    19. Sergei Koulayev & Marc Rysman & Scott Schuh & Joanna Stavins, 2016. "Explaining adoption and use of payment instruments by US consumers," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 293-325, May.
    20. Zhu Wang, 2012. "Debit card interchange fee regulation: some assessments and considerations," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 98(3Q), pages 159-182.

    More about this item

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:jcomle:v:10:y:2014:i:2:p:293-339.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/jcle .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.