Tuesday, April 3, 2012
Posted by D. Daniel Sokol
Lapo Filistrucchi, Department of Economics, CentER & TILEC, Tilburg University, Dipertimento di Scienze Economiche, University of Florence, Damien Geradin, Tilburg University - Tilburg Law and Economics Center (TILEC), University of Michigan Law School and Eric E.C. van Damme, TILEC propose Identifying Two-Sided Markets.
ABSTRACT: We review the burgeoning literature on two-sided markets focusing on the different definitions that have been proposed. In particular, we show that the well-known definition given by Evans is a particular case of the more general definition proposed by Rochet and Tirole. We then identify the crucial elements that make a market two-sided and, drawing from both theory and practice, derive suggestions for the identification of the two-sided nature of a market. Our suggestions are relevant not only for the analysis of traditional two-sided markets, such as newspapers and payment cards, but also for the analysis of many new markets, such as those for online social networks, online search engines and Internet news aggregators.