Multisided Markets and Platform Dominance

Edmond Baranes (), James Alleman and Paul Rappoport
Additional contact information
Edmond Baranes: MRE - Montpellier Recherche en Economie - UM - Université de Montpellier

Post-Print from HAL

Abstract: Facebook and Google and other internet giants are multisided markets (MSM). The user-side of the market, prices are zero—"free." On the other side of the market, Facebook's and Google's revenues are derived from advertising which appears when the users click on advertisers' web sites. They can extract exorbitant prices for ads, since they are the only source that can target ads directly to potential customers with laser-like focus to produce enormous monopoly rents. This monopolistic aspect of the internet giants is addressed in the Chapter. Monopoly pricing is not well defined in multisided markets. The paper examines non-transactional multisided markets for their ability to create consumers' harm. Estimates of Google's and Facebook's social cost in terms of consumers' welfare loss are $54 and $33 billion, respectively, for a total cost of at least 87 billion dollars. The dominant internet platforms can create three major harms to consumers: Increasing prices to consumers via added costs to the products being advertised,Elimination (or non-emergence) of competition in markets to the products being advertised,Increasing prices to consumers beyond the cost of advertising via the market power of the remaining firms in the market of the products being advertised.

Date: 2022
References: Add references at CitEc
Citations:

Published in Alleman, James; Rappoport, Paul N.; Hamoudia, Mohsen. Applied Economics in the Digital Era: Essays in Honor of Gary Madden, Springer International Publishing, pp.303-323, inPress, 978-3-030-40601-1

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03533118

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().