A few thoughts about competition policy in two-sided markets

Abstract

The paper reviews recent literature concerning two-sided markets or platforms. These markets are characterised by indirect externalities since the utility of users on one side of the market increases in the number of users on the other side of the market. There are many examples of two-sided markets, such as payment cards, newspapers, Internet advertising, search platforms for accommodations, software applications, etc. Competition policy has special features in two-sided markets, and the wisdom from standard markets may induce wrong decisions by competition authorities. Therefore, the paper discusses the definition of the relevant market in two-sided markets, when horizontal merger is beneficial to users, how predatory behaviour is defined, and other anti-competitive practices