DP15071 The Economics of Platforms: A Theory Guide for Competition Policy

Author(s): Bruno Jullien, Wilfried Sand-Zantman
Publication Date: July 2020
Keyword(s): competition policy, networks, platforms, two-sided markets
JEL(s): D82, L13, L41, L86
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15071

We propose an analysis of platform competition based on the academic literature with a view toward competition policy. First, we discuss to which extent competition can emerge in digital markets and show which forms it can take. In particular, we underline the role of dynamics, but also of platform differentiation, consumers multihoming and beliefs to allow competition in platform markets. Second, we analyze competition policy issues and discuss how rules designed for standard markets can perform in two-sided markets. We show that multi-sided externalities create new opportunities for anti-competitive conducts, often related to pricing and contractual imperfections.