The Consensus Among Economists on Multisided Platforms and its Implications for Excluding Evidence that Ignores It

11 Pages Posted: 12 Apr 2013 Last revised: 24 Apr 2013

See all articles by David S. Evans

David S. Evans

Market Platform Dynamics; Berkeley Research Group, LLC

Date Written: April 13, 2013

Abstract

There is now a professional consensus among economists that multisided platforms are the main form of business organization in many industries; that these platforms face interdependent demand from multiple groups of customers; and that profit-maximization in the face of this interdependent demand can in theory, and often does in practice, result in their charging a price to one group of customers that is less than marginal cost including zero or less than zero. Traditional economic models that do not consider interdependent demand do not yield reliable results for platform businesses. Many of the economic tools used in antitrust, including the various back-of-the-envelope tools such as critical loss analysis, are not reliable when applied to multisided platforms. In conducting reliable economic analysis of multisided platforms economists must either explicitly consider interdependent demand in their models or assess biases resulting from traditional tools to verify that they do not alter conclusions.

Keywords: two-sided markets, multisided platforms, antitrust, daubert motions, internet industries, predatory pricing, market power, market definition

JEL Classification: K21, K41, L41, L40, L42, L51, L86

Suggested Citation

Evans, David S., The Consensus Among Economists on Multisided Platforms and its Implications for Excluding Evidence that Ignores It (April 13, 2013). Available at SSRN: https://ssrn.com/abstract=2249817 or http://dx.doi.org/10.2139/ssrn.2249817

David S. Evans (Contact Author)

Market Platform Dynamics ( email )

140 South Dearborn St.
Chicago, IL 60603
United States

Berkeley Research Group, LLC ( email )

99 High St.
Boston, MA 02110
United States

HOME PAGE: http://davidsevans.org

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
720
Abstract Views
4,663
Rank
67,856
PlumX Metrics