One-Sided Logic in Two-Sided Markets

Abstract

In this paper, the author considers eight basic fallacies that can arise from using conventional wisdom from one-sided markets in two-sided market settings. These fallacies are illustrated using statements made in the context of regulatory investigations into credit card schemes in Australia and the United Kingdom. The author also discusses how these fallacies may be reconciled by proper use of a two-sided market analysis, making reference to the relevant economics literature where applicable. The analysis is supported by observations on other two-sided markets.

Keywords: one-sided, two-sided, fallacies, credit, schemes

JEL Classification: L1