Accounting for Two-Sided Business Reality Reduces False Negatives as Well as False Positives in Antitrust Decisions Involving Platform Enterprises

Forthcoming, CPI Antitrust Chronicle, April 2018

6 Pages Posted: 7 Mar 2018  

David S. Evans

Global Economics Group; University College London

Richard Schmalensee

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: February 28, 2018

Abstract

The two-sided analysis of platform businesses isn’t pro-defendant or pro-plaintiff. By accounting for business reality and modern economics, it helps courts and enforcement agencies reach the right decision and thereby reduce the likelihood of false negatives as well as false positives. Sometimes two-sided analysis is essential for uncovering how conduct harms competition and consumers. Other times it helps establish that conduct is innocuous or beneficial. Fears, and hopes, that two-sided analysis will discourage enforcement efforts are misplaced.

Keywords: two-sided markets, multisided platforms, rule of reason, mergers platforms, error costs in antitrust, network effects, American Express steering case, Supreme Court and platforms

JEL Classification: K21, K23, K40, L13, L14, L41, L42, L51 L86

Suggested Citation

Evans, David S. and Schmalensee, Richard, Accounting for Two-Sided Business Reality Reduces False Negatives as Well as False Positives in Antitrust Decisions Involving Platform Enterprises (February 28, 2018). Forthcoming, CPI Antitrust Chronicle, April 2018. Available at SSRN: https://ssrn.com/abstract=3131288

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

Richard Schmalensee

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Room E62-525
Cambridge, MA 02142
United States
617-253-2957 (Phone)
617-258-6617 (Fax)

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