Discussion paper

DP9164 Exclusionary Pricing in a Two-Sided Market

In this paper we provide a new way of modelling two-sided markets, and we then use this model to study anti-competitive conduct in an asymmetric two-sided market which captures the main features of some recent antitrust cases. We show that below-cost pricing on one market side can allow an incumbent firm to exclude a more efficient rival which does not have a customer base yet. This exclusionary behaviour is the more likely to occur the more mature the market and the stronger the established customer base of the incumbent.


Motta, M and H Vasconcelos (2012), ‘DP9164 Exclusionary Pricing in a Two-Sided Market‘, CEPR Discussion Paper No. 9164. CEPR Press, Paris & London. https://cepr.org/publications/dp9164