Essential Principles for the Design of Antitrust Analysis for Multisided Platforms

Abstract

This paper presents some basic principles for conducting the antitrust analysis of multisided platforms that courts could adapt to the particulars of their jurisdictions and case laws. It has a particular focus on measuring consumer surplus for platform businesses and the implications of that for the design of antitrust rules. It shows how multisided platforms increase welfare by reducing transactions costs and resolving externalities among economic agents. Its presents three normative principles for policy interventions and illustrates these principles by showing how they apply to recent debates over privacy. The paper then develops a framework for considering antitrust rules in light of these principles given the objectives of antitrust law, error costs, and developing administrable rules. It lastly considers the competing approaches to analyzing multisided platforms that were presented to the Supreme Court in the American Express litigation and the Court’s decision in light of these principles.

Keywords: multisided platforms, two-sided platforms, antitrust policy, American Express Supreme Court, design of competition policy, consumer welfare in antitrust

JEL Classification: K21, K4, K15, L4, L41, L42, L5