A SSNIP test for two-sided markets: the case of media
AbstractI discuss the design and implementation of a SSNIP test in order to identify the relevant market in a media market. I argue that in such a two-sided market the traditional SSNIP test cannot be applied as it is usually conceived but rather should be modified in order to take into account indirect network externalities. I discuss the issues of which price the hypothetical monopolist should be thought of as raising, of whether we should look at profits changes on only one side or on both sides of the market and of which feedback among the two sides of the market we should take into account. I then derive the relevant formulas for Critical Loss Analysis. These look much uglier than in a single-sided market but in fact they are easy to calculate as they are still expressed in terms of elasticities and of current observed markups, prices and quantities. Data requirements are however higher as one needs to estimate the matrixes of the own and cross price elasticities of demand on the two-sides of the market and the matrixes of the network effects. The paper fills a gap in the economic literature, so much more as market definition in media markets is at the centre of many recent competition policy and regulation cases around the world.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 08-34.
Length: 45 pages
Date of creation: Oct 2008
Date of revision: Oct 2008
Contact details of provider:
Web page: http://www.NETinst.org/
two-sided markets; SSNIP test; Hypothetical Monopolist test; critical loss analysis; critical elasticity analysis; market definition; media;
Find related papers by JEL classification:
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
- K20 - Law and Economics - - Regulation and Business Law - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-04 (All new papers)
- NEP-COM-2008-11-04 (Industrial Competition)
- NEP-CUL-2008-11-04 (Cultural Economics)
- NEP-IND-2008-11-04 (Industrial Organization)
- NEP-LAW-2008-11-04 (Law & Economics)
- NEP-MIC-2008-11-04 (Microeconomics)
- NEP-MKT-2008-11-04 (Marketing)
- NEP-NET-2008-11-04 (Network Economics)
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.:
- Kaiser, Ulrich & Wright, Julian, 2004.
"Price Structure in Two-sided Markets: Evidence from the Magazine Industry?,"
ZEW Discussion Papers
04-80, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Kaiser, Ulrich & Wright, Julian, 2006. "Price structure in two-sided markets: Evidence from the magazine industry," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 1-28, January.
- Rochet, Jean-Charles & Tirole, Jean, 2003.
"Platform Competition in Two-Sided Markets,"
IDEI Working Papers
152, Institut d'Économie Industrielle (IDEI), Toulouse.
- Dennis W. Carlton, 2007.
"Market Definition: Use and Abuse,"
EAG Discussions Papers
200706, Department of Justice, Antitrust Division.
- Chandra, Ambarish & Collard-Wexler, Allan, 2008.
"Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry,"
7954, University Library of Munich, Germany.
- Ambarish Chandra & Allan Collard-Wexler, 2009. "Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1045-1070, December.
- David S. Evans & Richard Schmalensee, 2005.
"The Industrial Organization of Markets with Two-Sided Platforms,"
NBER Working Papers
11603, National Bureau of Economic Research, Inc.
- David Evans & Richard Schmalensee, 2007. "The Industrial Organization of Markets with Two-Sided Platforms," CPI Journal, Competition Policy International, vol. 3.
- Marc Rysman, 2004. "Competition Between Networks: A�Study of the Market for Yellow�Pages," Review of Economic Studies, Wiley Blackwell, vol. 71(2), pages 483-512, 04.
- Lapo Filistrucchi & Damien Geradin & Eric van Damme, 2012.
"Identifying Two-Sided Markets,"
Working Papers - Economics
wp2012_01.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
- Willem H. Boshoff, 2011. "Antitrust market definition using statistical learning techniques and consumer characteristics," Working Papers 224, Economic Research Southern Africa.
- Tosza, Katarzyna, 2009. "Payment Card Systems as an Example of two-sided Markets - a Challenge for Antitrust Authorities," MPRA Paper 23822, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicholas Economides).
If references are entirely missing, you can add them using this form.