Competition and Regulatory Policy for Multi-Sided Platforms with Applications to the Web Economy

Concurrences, No. 2, pp. 57-62, 2008

31 Pages Posted: 6 Feb 2008 Last revised: 29 Sep 2013

See all articles by David S. Evans

David S. Evans

Global Economics Group; University College London

Date Written: March 2008

Abstract

This article is about a type of business that connects distinct groups of customers on a "multi-sided platform." Such businesses have been around for millennia. But their economic importance has increased with the Internet revolution. Many significant web-based businesses such as eBay, Facebook, and Google are multi-sided. Multi-sided platform businesses must account for the fact that each type of customers they attract values more of the other type of customers. Buyers value many sellers and sellers many buyers, for example, on Internet auction sites. That interdependence has significant implications for the economic behavior of these businesses (they often break even or lose money on customers on one side) and for how competition authorities and regulators should analyze them (market definition must account for the linkages between the multiple customer groups). Multi-sided platforms tend to engage in complex business practices. The challenge for policymakers is distinguishing anticompetitive from complicated but benign behavior. This paper is based on the Beesley Lecture, sponsored by the London Business School and the Institute for Economic Affairs, which I was invited to deliver on 26 October 2007 in London.

Keywords: Multi-Sided Platforms, Competition Policy, Internet Economy, Web-Based Platforms

Suggested Citation

Evans, David S., Competition and Regulatory Policy for Multi-Sided Platforms with Applications to the Web Economy (March 2008). Concurrences, No. 2, pp. 57-62, 2008. Available at SSRN: https://ssrn.com/abstract=1090368 or http://dx.doi.org/10.2139/ssrn.1090368

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

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