Economics of Vertical Restraints for Multi-Sided Platforms

25 Pages Posted: 3 Jan 2013 Last revised: 10 Jan 2013

David S. Evans

Global Economics Group; University College London

Date Written: January 2, 2013

Abstract

This paper presents an overview of what economists can say about vertical constraints by multi-sided platforms at this stage in the development of our knowledge about the economics of these businesses. It describes the general procompetitive and anticompetitive uses of vertical restraints by multi-sided platforms. It then focuses on the role of critical mass for multi-sided platforms and how vertical restraints might be used on the one hand, anti-competitively to prevent rivals from achieving critical mass and long-term growth and, on the other hand, pro-competitively, to ensure the platform and its customers that the platform will remain viable.

Keywords: vertical restraints, multi-sided platforms, antitrust, two-sided markets, abuse of dominance, monopolization, tying, exclusive dealing, bundled rebates, most favored nation clauses, critical mass

JEL Classification: K21, L12, L13, L42, L40, L41

Suggested Citation

Evans, David S., Economics of Vertical Restraints for Multi-Sided Platforms (January 2, 2013). University of Chicago Institute for Law & Economics Olin Research Paper No. 626. Available at SSRN: https://ssrn.com/abstract=2195778 or http://dx.doi.org/10.2139/ssrn.2195778

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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