Two-Sided Market Literature Enriches Traditional Antitrust Analysis

Competition Policy International, Vol. 3, No. 1, Spring 2007

10 Pages Posted: 23 May 2007

See all articles by William H. Rooney

William H. Rooney

Willkie Farr & Gallagher LLP

David K. Park

Willkie Farr & Gallagher LLP

Abstract

The term two-sided market sounds strange to the antitrust lawyer's ear. Antitrust markets typically are not described as having sides. They consist of a relevant product or set of products, cover a geographic area, and include transactions between buyers and sellers at a particular level of distribution (e.g., manufacturing, wholesale, retail). Although most market participants buy inputs and sell outputs, they usually buy in the market for the input and sell in the market for the output, not compete in a two-sided market.

Still, the growing and informative literature on two-sided platforms, businesses, and markets has much to offer antitrust law. That literature emphasizes that the demand for otherwise distinct products or services may in fact be linked and that a competitive-effects analysis cannot myopically ignore that linkage. To the extent that the two-sided market literature improves competitive-effects analysis, it improves the fundamental purpose of antitrust law.

This essay briefly discusses the importance of acknowledging linked demand for, and relationships among, otherwise distinct products or services, as recommended by the two-sided market literature, with respect to competitive-effects assessments and market definition. We also observe that recognizing linked demand and interrelationships among products or services facilitates the application of legal rules in antitrust cases.

Suggested Citation

Rooney, William H. and Park, David K., Two-Sided Market Literature Enriches Traditional Antitrust Analysis. Competition Policy International, Vol. 3, No. 1, Spring 2007, Available at SSRN: https://ssrn.com/abstract=987867

William H. Rooney (Contact Author)

Willkie Farr & Gallagher LLP ( email )

787 Seventh Avenue
New York, NY 10019-6099
United States

David K. Park

Willkie Farr & Gallagher LLP ( email )

787 Seventh Avenue
New York, NY 10019-6099
United States

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