Both Sides Now: A Brief Reflection on the Two-Sided Market Debate

James Musgrove, Jun 13, 2013

At the 2013 American Bar Association Section of Antitrust Law Spring Meeting I had the honor to chair a session entitled Both Sides Now: What’s Special About Two Sided Markets? The program benefitted from the participation of some of the leading legal and economic thinkers on this issue, including Dr. David Evans, who is a leader in the economics of two-sided markets; Renata Hesse of the Department of Justice, who has had cases involving and written about two-sided markets; Joseph Simons of Paul Weiss, who similarly has worked on a number of two-sided market matters; and Christian Ahlborn of Linklaters with the European perspective on two-sided markets.

The interesting take away, as an observer, was that there was general agreement on the existence and theoretical relevance of two-sided markets-or more properly, two-sided platforms-but where the speakers failed to come to agreement, and where the jurisprudence seems to have failed to come to ground, is the question of what the practical, case-altering implications of market platforms being two-sided means. There can be no debate that meaningful portions of the economy-in the range perhaps of 15 percent – 25 percent-operate in two-sided systems. So, this is not merely an academic debate, it has huge practical implications for the economy.

Dr. Evans explained why a number of the traditional antitrust tools which we employ, including the Lerner Index, the SSNIP test, critical loss formulas, upw…

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