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Competition and Antitrust in Two-Sided Markets, Journal of Competition Law and Economics

Abstract

This article extends antitrust analysis to two-sided markets in which a virtual monopolist competes with local bricks-and-mortar dealers. The discussion examines the market power of an Internet market maker as well as an Internet matchmaker. The analysis shows that equilibrium in a two-sided market can be characterized as a one-sided market in which transaction demand depends on the bid-ask spread of the central market maker. This allows for a straightforward extension of critical demand elasticity and critical loss analysis from one-sided markets to two-sided markets, with antitrust tests based on the hypothetical monopolist's bid-ask spread. Antitrust analysis of a one-sided market also carries over to a two-sided market with a matchmaker where antitrust tests are based on the sum of participation fees.

Type

Article

Author(s)

Alexei Alexandrov, Daniel Spulber, George Deltas

Date Published

2011

Citations

Alexandrov, Alexei, Daniel Spulber, and George Deltas. 2011. Competition and Antitrust in Two-Sided Markets. Journal of Competition Law and Economics. 7(4): 775-812.

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