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Defining Markets that Involve Multi-Sided Platform Businesses: An Empirical Framework With an Application to Google's Purchase of DoubleClick

46 Pages Posted: 7 Nov 2007 Last revised: 25 Oct 2012

David S. Evans

Global Economics Group; University College London

Michael D. Noel

Texas Tech University

Multiple version iconThere are 2 versions of this paper

Date Written: November 6, 2007

Abstract

A multi-sided platform (MSP) serves as an intermediary for two or more groups of customers who are linked by indirect network effects. Recent research has found that MSPs are significant in many industries and that some standard economic results - such as the Lerner Index - do not apply to them, in material ways, without some significant modification to take linkages between the multiple sides into account. This article extends several key tools used for the analysis of mergers to situations in which one or more of the suppliers are MSPs. It shows that the application of traditional tools to mergers involving MSPs results in biases the direction of which depends on the particular tool being used and other conditions. It also extends these tools to the analysis of the merger of MSPs. The techniques are illustrated with an application to an acquisition by Google in the online advertising industry.

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

Suggested Citation

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 (November 6, 2007). Available at SSRN: https://ssrn.com/abstract=1027933 or http://dx.doi.org/10.2139/ssrn.1027933

David S. Evans (Contact Author)

Global Economics Group ( email )

111 Devonshire St.
Suite 900
Boston, MA 02108
United States

University College London ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

Michael D. Noel

Texas Tech University ( email )

237 Holden Hall
Box 41014
Lubbock, TX 79407
United States

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