Working Paper: CEPR ID: DP15071
Authors: Bruno Jullien; Wilfried Sandzantman
Abstract: We propose an analysis of platform competition based on the academic literature witha view toward competition policy. First, we discuss to which extent competition canemerge in digital markets and show which forms it can take. In particular, we underlinethe role of dynamics, but also of platform differentiation, consumers multihomingand beliefs to allow competition in platform markets. Second, we analyzecompetition policy issues and discuss how rules designed for standard markets canperform in two-sided markets. We show that multi-sided externalities create newopportunities for anti-competitive conducts, often related to pricing and contractualimperfections.
Keywords: networks; platforms; two-sided markets; competition policy
JEL Codes: L13; L41; L86; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| dynamics and platform differentiation (C69) | competition in digital markets (L13) |
| consumer multi-homing and beliefs about platform success (D16) | competitive outcomes (L13) |
| critical mass of users (D16) | market dominance (L11) |
| market dominance (L11) | tipping effect (F16) |
| multisided externalities (D62) | anti-competitive practices (L41) |
| pricing strategies and contractual arrangements (L14) | exploitation of market power (L12) |
| strong network effects (D85) | monopolistic outcomes (L12) |