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One-sided Logic in Two-sided Markets

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Author Info
Julian Wright () (Department of Economics, National University of Singapore)

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Abstract

In this paper, I consider eight basic fallacies that can arise from using conventional wisdom from one-sided markets in two-sided market settings. These fallacies are illustrated using statements made in the context of regulatory investigations into credit card schemes in Australia and the United Kingdom. I discuss how these fallacies may be reconciled by proper use of a two-sided market analysis, making reference to the relevant economics literature where applicable. The analysis is supported by observations on other two-sided markets.

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Publisher Info
Article provided by Concept Economics in its journal Review of Network Economics.

Volume (Year): 3 (2004)
Issue (Month): 1 (March)
Pages: 42-63
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Handle: RePEc:rne:rneart:v:3:y:2004:i:1:p:42-63

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Related research
Keywords: Two-sided markets credit cards multihoming antitrust

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Sujit Chakravorti, 2003. "Theory of Credit Card Networks: A Survey of the Literature," Review of Network Economics, Concept Economics, vol. 2(2), pages 50-68, June. [Downloadable!]
    Other versions:
  2. David S. Evans, 2003. "Some Empirical Aspects of Multi-Sided Platform Industries," Review of Network Economics, Concept Economics, vol. 2(3), pages 191-209, September. [Downloadable!]
  3. Faulhaber, Gerald R, 1975. "Cross-Subsidization: Pricing in Public Enterprises," American Economic Review, American Economic Association, vol. 65(5), pages 966-77, December. [Downloadable!] (restricted)
  4. Robert M. Hunt, 2003. "An Introduction to the Economics of Payment Card Networks," Review of Network Economics, Concept Economics, vol. 2(2), pages 80-96, June. [Downloadable!]
    Other versions:
  5. Graeme Guthrie & Julian Wright, 2003. "Competing Payment Schemes," Departmental Working Papers wp0311, National University of Singapore, Department of Economics. [Downloadable!]
  6. Mark Armstrong, 2005. "Competition in Two-Sided Markets," Industrial Organization 0505009, EconWPA. [Downloadable!]
    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nicholas Economides & Joacim Tag, 2007. "Net Neutrality on the Internet: A Two-sided Market Analysis," Working Papers 07-27, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
    Other versions:
  2. María Fernanda Viecens, 2006. "Two-Sided Platforms With Endogenous Quality Differentiation," Economics Working Papers we061204, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  3. Anderson, Simon P & Gabszewicz, Jean Jaskold, 2005. "The Media and Advertising: A Tale of Two-Sided Markets," CEPR Discussion Papers 5223, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Wilko Bolt & Alexander F. Tieman, 2005. "Social Welfare and Cost Recovery in Two-Sided Markets," IMF Working Papers 05/194, International Monetary Fund. [Downloadable!]
    Other versions:
  5. Jay Pil Choi, 2006. "Tying in Two-Sided Markets with Multi-Homing," Working Papers 06-04, NET Institute, revised Sep 2006. [Downloadable!]
    Other versions:
  6. Simon P. Anderson, 2005. "Regulation of Television advertising," Virginia Economics Online Papers 363, University of Virginia, Department of Economics. [Downloadable!]
  7. Nicholas Economides, 2007. "Nonbanks in the Payments System: Vertical Integration Issues," Working Papers 07-06, NET Institute, revised Aug 2007. [Downloadable!]
    Other versions:
  8. Eric Brousseau & Thierry Penard, 2007. "The Economics of Digital Business Models: A Framework for Analyzing the Economics of Platforms," Review of Network Economics, Concept Economics, vol. 6(2), pages 81-114, June. [Downloadable!]
  9. Wilko Bolt & Alexander F. Tieman, 2004. "Skewed Pricing in Two-Sided Markets: An IO approach," DNB Working Papers 013, Netherlands Central Bank, Research Department. [Downloadable!]
    Other versions:
  10. Cortade, Thomas, 2006. "A Strategic Guide on Two-Sided Markets Applied to the ISP Market," MPRA Paper 2602, University Library of Munich, Germany. [Downloadable!]
  11. Jean-Charles Rochet & Jean Tirole, 2006. "Externalities and Regulation in Card Payment Systems," Review of Network Economics, Concept Economics, vol. 5(1), pages 1-14, March. [Downloadable!]
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This page was last updated on 2008-8-28.


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