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Identifying Two-Sided Markets

We review the burgeoning literature on two-sided markets focusing on the different definitions that have been proposed. In particular, we show how the well-known definition given by Evans is a particular case of the more general definition proposed by Rochet and Tirole. We then identify the crucial elements that make a market two-sided and, drawing from both theory and practice, derive suggestions for the identification of the two-sided nature of a market. Our suggestions are relevant not only for the analysis of traditional two-sided markets, such as newspapers and payment cards, but also for the analysis of many new markets, such as those for online social networks, online search engines and Internet news aggregators.

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Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa in its series Working Papers - Economics with number wp2012_01.rdf.

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Length: 27 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:frz:wpaper:wp2012_01.rdf
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  1. GABSZEWICZ, Jean J. & GARELLA, Paolo G. & SONNAC, Nathalie, 2005. "Newspapers’ market shares and the theory of the circulation spiral," CORE Discussion Papers 2005084, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Hagiu Andrei, 2007. "Merchant or Two-Sided Platform?," Review of Network Economics, De Gruyter, vol. 6(2), pages 1-19, June.
  3. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, . "Press advertising and the ascent of the `Pensée Unique'," CORE Discussion Papers RP -1512, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Pauline Affeldt & Lapo Filistrucchi & Tobias J. Klein, 2013. "Upward Pricing Pressure in Two‐sided Markets," Economic Journal, Royal Economic Society, vol. 123(11), pages F505-F523, November.
  5. Elena Argentesi & Lapo Filistrucchi, 2007. "Estimating market power in a two-sided market: The case of newspapers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1247-1266.
  6. Gabszewicz, Jean J & Laussel, Didier & Sonnac, Nathalie, 2002. " Press Advertising and the Political Differentiation of Newspapers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 317-34.
  7. Erich Emch & T. Scott Thompson, 2006. "Market Definition and Market Power in Payment Card Networks," EAG Discussions Papers 200609, Department of Justice, Antitrust Division.
  8. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
  9. Marc Rysman, 2009. "The Economics of Two-Sided Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 125-43, Summer.
  10. Geoffrey G. Parker & Marshall W. Van Alstyne, 2005. "Two-Sided Network Effects: A Theory of Information Product Design," Management Science, INFORMS, vol. 51(10), pages 1494-1504, October.
  11. Lapo Filistrucchi & Damien Geradin & Eric van Damme & Pauline Affeldt, 2013. "Market Definition in Two-Sided Markets: Theory and Practice," Working Papers - Economics wp2013_05.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  12. Ackerberg, Daniel & Lanier Benkard, C. & Berry, Steven & Pakes, Ariel, 2007. "Econometric Tools for Analyzing Market Outcomes," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 63 Elsevier.
  13. repec:dgr:kubtil:2011046 is not listed on IDEAS
  14. Rosse, James N, 1970. "Estimating Cost Function Parameters without Using Cost Data: Illustrated Methodology," Econometrica, Econometric Society, vol. 38(2), pages 256-75, March.
  15. 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.
  16. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, 06.
  17. Przemyslaw Jeziorski, 2010. "Merger enforcement in two-sided markets," Economics Working Paper Archive 570, The Johns Hopkins University,Department of Economics.
  18. repec:cpi:atchrn:7.2.2010:i=5616 is not listed on IDEAS
  19. Minjae Song, 2013. "Estimating Platform Market Power in Two-Sided Markets with an Application to Magazine Advertising," 2013 Meeting Papers 1264, Society for Economic Dynamics.
  20. Wright Julian, 2004. "One-sided Logic in Two-sided Markets," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-21, March.
  21. Green, Paul E & Srinivasan, V, 1978. " Conjoint Analysis in Consumer Research: Issues and Outlook," Journal of Consumer Research, University of Chicago Press, vol. 5(2), pages 103-23, Se.
  22. repec:cpi:cpijrn:3.1.2007:i=4907 is not listed on IDEAS
  23. Richard Blundell, 2005. "Presidential Address: How Revealing Is Revealed Preference?," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 211-235, 04/05.
  24. Senay Sokullu, 2012. "Nonparametric Analysis of Two-Sided Markets," Bristol Economics Discussion Papers 12/628, Department of Economics, University of Bristol, UK.
  25. Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
  26. Lapo Filistrucchi & Tobias Klein & Thomas Michielsen, 2010. "Merger Simulation in a Two-Sided Market: The Case of the Dutch Daily Newspapers," Working Papers 10-15, NET Institute.
  27. Lapo Filistrucchi, 2008. "A SSNIP test for two-sided markets: the case of media," Working Papers 08-34, NET Institute, revised Oct 2008.
  28. Jean-Charles Rochet & Jean Tirole, 2002. "Cooperation Among Competitors: Some Economics Of Payment Card Associations," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 549-570, Winter.
  29. 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.
  30. Kaiser, Ulrich & Song, Minjae, 2009. "Do media consumers really dislike advertising? An empirical assessment of the role of advertising in print media markets," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 292-301, March.
  31. Stefan Behringer & Lapo Filistrucchi, 2009. "Price Wars in Two-Sided Markets: The case of the UK Quality Newspapers," Working Papers 09-26, NET Institute, revised Dec 2009.
  32. Kenneth C. Wilbur, 2008. "A Two-Sided, Empirical Model of Television Advertising and Viewing Markets," Marketing Science, INFORMS, vol. 27(3), pages 356-378, 05-06.
  33. repec:dgr:kubtil:2012029 is not listed on IDEAS
  34. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-72, September.
  35. Emch Eric & Thompson T. Scott, 2006. "Market Definition and Market Power in Payment Card Networks," Review of Network Economics, De Gruyter, vol. 5(1), pages 1-16, March.
  36. Marc Rysman, 2004. "Competition Between Networks: A Study of the Market for Yellow Pages," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 483-512.
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