Vertical restraints and exclusivity纵向约束与垄断.pptVIP

What do certain key factors of 2-sided markets mean for: Market definition? Predation? Collusion? Exclusive contracts? Media regulation and mergers? 2-sided markets: First key factor In a typical 2-sided market: DA is function not only of pA but also of qB DB is function not only of pB but also of qA What does this mean for market definition? Market definition SSNIP test: Could a hypothetical monopolist profitably sustain a small but significant and non-transitory increase in price? If no, the relevant antitrust market must be wider If yes, the market is not any wider (but could be narrower) Key question for 2-sided markets: Which feedback loops should be taken into account? Market definition: Feedback loops Market definition: Feedback loops Market definition: Feedback loops Market definition: Feedback loops Market definition: Feedback loops Market definition: Feedback loops Market definition: Feedback loops Market definition: Feedback loops Market definition: Feedback loops 2-sided markets: Second key factor pA will tend to be lower when either: each additional buyer in market A generates significant extra revenue in market B; or it is hard to persuade market A buyers to sign up. More formally (Rochet Tirole, 2006): price – ‘cost’ = 1 . price elasticity of demand If ‘cost’ increases (due to lower revs in other market), then so will price (The ‘waterbed effect’) Predation and excessive pricing In a two-side market, we may typically observe: Prices below marginal cost on one side of a market; and Prices well above marginal cost on the other Such pricing is an efficient response to network externalities. Competition authorities need to be aware of this when assessing predation or excessive pricing We also need to be aware of the ‘waterbed effect’, when imposing remedies However… This does not mean predation (and excessive pricing) doesn’t occur For example, what if pricing structure affects market structure?