Abstract

http://ssrn.com/abstract=2240850
 
 

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Market Definition in Two-Sided Markets: Theory and Practice


Lapo Filistrucchi


Tilburg University, Department of Economics, CentER & TILEC; University of Florence, Dipartimento di Scienze Economiche

Damien Geradin


George Mason University School of Law; Tilburg University - Tilburg Law and Economics Center (TILEC); Covington & Burling LLP

Eric Van Damme


TILEC and CentER, Tilburg University

Pauline Affeldt


ESMT European School of Management and Technology

March 16, 2013

TILEC Discussion Paper No. 2013-009
Tilburg Law School Research Paper No. 09/2013

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.

Number of Pages in PDF File: 50

Keywords: two-sided markets, two-sided platforms, market definition, SSNIP test

JEL Classification: L40, L50, K21

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Date posted: July 7, 2013  

Suggested Citation

Filistrucchi, Lapo and Geradin, Damien and van Damme, Eric and Affeldt, Pauline, Market Definition in Two-Sided Markets: Theory and Practice (March 16, 2013). TILEC Discussion Paper No. 2013-009; Tilburg Law School Research Paper No. 09/2013. Available at SSRN: http://ssrn.com/abstract=2240850 or http://dx.doi.org/10.2139/ssrn.2240850

Contact Information

Lapo Filistrucchi (Contact Author)
Tilburg University, Department of Economics, CentER & TILEC ( email )
P.O. Box 90153
Tilburg, Noord-Brabant NL-5000 LE
Netherlands
+31 13 466 3360 (Phone)
+31 13 466 3042 (Fax)
HOME PAGE: http://center.uvt.nl/staff/filistrucchi/
University of Florence, Dipartimento di Scienze Economiche ( email )
via delle Pandette 9
Florence, Florence IT-50127
Italy
Damien Geradin
George Mason University School of Law
3301 Fairfax Drive
Arlington, VA 22201
United States

George Mason Law School Logo

Tilburg University - Tilburg Law and Economics Center (TILEC) ( email )
Warandelaan 2
Tilburg, 5000 LE
Netherlands
HOME PAGE: http://www.tilburguniversity.nl/tilec/
Covington & Burling LLP ( email )
1201 Pennsylvania Avenue, N.W.
Washington, DC 20004-2401
United States
Eric E.C. Van Damme
TILEC and CentER, Tilburg University ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 3045 (Phone)
+31 13 466 3066 (Fax)
Pauline Affeldt
ESMT European School of Management and Technology ( email )
Schlossplatz 1
10117 Berlin
Germany
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