The Industrial Organization of Markets with Two-Sided Platforms

By Global Economics Group on March 17, 2011

Dr. David S. Evans, Chairman of Global Economics Group, and Dr. Richard Schmalensee, Director at Global Economics Group, provide a detailed theoretical framework for the economics of two-sided platforms. In The Industrial Organization of Markets with Two-Sided Platforms, (Competition Policy International, Col. 3, No. 1, 2007), Drs. Evans and Schmalensee provide a brief introduction to the economics of two-sided platforms and the implications for antitrust analysis. They show how economic theory behind two-sided platforms differs from traditional markets, in particular, how profit-maximizing prices may entail below marginal cost pricing to one set of customers over long run, and may even be negative in some cases. The Industrial Organization of Markets with Two-Sided Platforms