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

David S. Evans

Global Economics Group; University College London

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)

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

Paper statistics

Downloads
476
Rank
46,596
Abstract Views
1,839