Wednesday, April 29, 2015

Economic Arguments in the Amex Trial: Considering Market Definition and Market Power with a Two-Sided Platform

Henry McFarlane, Economics Incorporated discusses Economic Arguments in the Amex Trial: Considering Market Definition and Market Power with a Two-Sided Platform.

ABSTRACT: This paper addresses issues concerning how to present and assess economic evidence that arose in the recent antitrust litigation involving the U.S. Department of Justice (DOJ) and America n Express (Amex). It focuses on how Amex’s nature as a two-sided platform affected market definition and the analysis of market power. DOJ proposed a market definition based on one side of the platform, general purpose credit and charge card services sold to merchants. The court accepted that definition. DOJ also analyzed market power that was exercised solely on one side of the platform — against merchants. The court was willing to find market power based on one side of the platform if there was no compelling offsetting evidence pertaining to the other side. Defining markets and looking for market power on only one side of a two-sided platform risks missing conditions on the other side that would undermine those findings.

https://lawprofessors.typepad.com/antitrustprof_blog/2015/04/economic-arguments-in-the-amex-trial-considering-market-definition-and-market-power-with-a-two-sided.html

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