The Economics of Platforms: A Theory Guide for Competition Policy

Abstract

We propose an analysis of platform competition based on the academic literature with
a view toward competition policy. First, we discuss to which extent competition can
emerge in digital markets and show which forms it can take. In particular, we underline
the role of dynamics, but also of platform differentiation, consumers multihoming
and beliefs to allow competition in platform markets. Second, we analyze
competition policy issues and discuss how rules designed for standard markets can
perform in two-sided markets. We show that multi-sided externalities create new
opportunities for anti-competitive conducts, often related to pricing and contractual
imperfections.

Keywords: Networks, Platforms, Markets, Competition Policy.

JEL Classification: L00, L1, L4, L12, L13, L14, K21