An Instant Classic: Rochet & Tirole, Platform Competition in Two-Sided Markets
Richard Schmalensee, Jan 30, 2015
The press release announcing that Jean Tirole had been awarded the 2014 Nobel Prize in Economic Sciences noted that he had “made important theoretical research contributions in a number of areas.” One of his most important contributions was the discovery and pioneering analysis of multi-sided platforms (“MSPs”) in his 2003 paper with Jean-Charles Rochet, Platform Competition in Two-Sided Markets. According to Google Scholar, this paper has been cited over 1800 times, fourth among Jean’s many papers. The Rochet & Tirole (“RT”) paper has spawned an enormous literature in a very short time—over 200 papers by the end of 2012,4 and the economics of multi-sided platforms is now a standard component of graduate courses in industrial organization. The RT paper is the first post-2000 academic paper to be deemed a classic by Competition Policy International, an honor it richly deserves.