Two-sided markets: the subject matter specification

Andrey Shastitko and E. Parshina ()

Journal of Modern Competition, 2016, vol. 10, issue 1, 5-18

Abstract: Pricing and investment strategies on two-sided markets are significantly affected by the presence of cross-network effects between the two sides of the platform. In order to maximize profit platform internalizes positive externalities and expands the scale of transactions by making decisions about the level and structure of prices for different groups of consumers. Adjusting the structure of rates, established by platform for various parties, can be considered as a mechanism to internalize crossnetwork effect. The concept of two-sided markets drew attention to the problem of using the traditional one-sided logic on two-sided market, but the problem may also be in too broad interpretation of the two-sided markets concept and the use of two-sided logic in the traditional one-sided markets. Two-sided markets features impose certain restrictions and require new approaches in terms of economic analysis for the purposes of the application of antitrust laws. The paper is carried out to compare different approaches to defining the platform as an object of study, as well as an attempt to relate the concept of two-sided markets with traditional concepts of the theory of externalities and third degree price discrimination.

Keywords: two-sided markets; platforms; cross-network effects; competition policy; price discrimination; transaction costs (search for similar items in EconPapers)
Date: 2016
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