Abstract

http://ssrn.com/abstract=835504
 
 

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Analyzing Market Definition and Power in Multi-sided Platform Markets


Michael D. Noel


University of California, San Diego

David S. Evans


University of Chicago Law School; University College London; Global Economics Group

October 21, 2005


Abstract:     
The SSNIP test and Critical Loss Analysis are widely used tools for determining market definition in merger and sometimes other antitrust matters. However, the standard techniques used to test for a relevant antitrust market are incorrect when the firms in question operate two-sided platforms. When a two-sided platform raises price on one side of its business, it negatively impacts both sides iteratively. We show how Critical Loss Analysis can be extended to the case of two-sided platforms and drive formulas for its implementation. We perform comparative statics to show that the bias from the misuse of one-sided formulas in a two-sided setting can be large.

Number of Pages in PDF File: 45

JEL Classification: K21, K41, L11, L40, L41

working papers series


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Date posted: November 4, 2005  

Suggested Citation

Noel, Michael D. and Evans, David S., Analyzing Market Definition and Power in Multi-sided Platform Markets (October 21, 2005). Available at SSRN: http://ssrn.com/abstract=835504 or http://dx.doi.org/10.2139/ssrn.835504

Contact Information

Michael D. Noel
University of California, San Diego ( email )
9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0502
United States
David S. Evans (Contact Author)
University of Chicago Law School ( email )
1111 E. 60th St.
Chicago, IL 60637
United States
University College London ( email )
London WC1E OEG
United Kingdom
Global Economics Group ( email )
1400 S. Dearborn, Suite 400
Chicago, IL 60603
United States
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