Two-sided markets and their relevance for competition policy

Nonfiction, Social & Cultural Studies, Political Science
Cover of the book Two-sided markets and their relevance for competition policy by Jitendra Jain, GRIN Publishing
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Author: Jitendra Jain ISBN: 9783640326983
Publisher: GRIN Publishing Publication: May 11, 2009
Imprint: GRIN Publishing Language: English
Author: Jitendra Jain
ISBN: 9783640326983
Publisher: GRIN Publishing
Publication: May 11, 2009
Imprint: GRIN Publishing
Language: English

Seminar paper from the year 2006 in the subject Politics - International Politics - Topic: European Union, grade: Good, Ruhr-University of Bochum, course: MA (ECUE), language: English, abstract: Two-sided markets consist of two or more exclusive groups, present simultaneously on a single platform. They both need each other. In order to succeed the platform provider must ensure active participation of both groups. In the beginning these bazaars face chicken-and-egg problem, which should be solved, sometimes even by providing free chicken. These markets include some of the most important industries in new economy such as mobile telephony companies, free TV services, OS suppliers, software providers, gaming companies, credit card companies, auction sites etc. Ebay and amazon are good examples of two-sided markets. In such two-sided markets buyers and sellers first trade with the intermediary/ies so as to gain access to the functionalities of a platform and then trade with each other under oligopolistic conditions. In chapter 1 of this paper an attempt has been made to describe finer nuances of two-sided markets. Thereafter I proceed to discuss the various dynamics of two-sided markets in chapter 2. Two-sided firms differ from traditional industries and they follow totally different business economics. Marginal cost does not help them in deciding optimal price. Pricing policies and other business strategies must be formulated in such a way that it should ensure active interaction of both groups. Pricing strategy should get both sides on board and should also solve chicken-and-egg problem. Chapter 3 describes the pricing policy adopted by two-sided markets. Chapter 4 deals with relevance of two-sided markets for competition policy. Competition Authorities do not need different set of rules to regulate these industries. However Competition Authorities must consider various economic principles that influence pricing and investment decisions in two-sided markets. Chapter 5 concludes with various observations and suggestions.

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Seminar paper from the year 2006 in the subject Politics - International Politics - Topic: European Union, grade: Good, Ruhr-University of Bochum, course: MA (ECUE), language: English, abstract: Two-sided markets consist of two or more exclusive groups, present simultaneously on a single platform. They both need each other. In order to succeed the platform provider must ensure active participation of both groups. In the beginning these bazaars face chicken-and-egg problem, which should be solved, sometimes even by providing free chicken. These markets include some of the most important industries in new economy such as mobile telephony companies, free TV services, OS suppliers, software providers, gaming companies, credit card companies, auction sites etc. Ebay and amazon are good examples of two-sided markets. In such two-sided markets buyers and sellers first trade with the intermediary/ies so as to gain access to the functionalities of a platform and then trade with each other under oligopolistic conditions. In chapter 1 of this paper an attempt has been made to describe finer nuances of two-sided markets. Thereafter I proceed to discuss the various dynamics of two-sided markets in chapter 2. Two-sided firms differ from traditional industries and they follow totally different business economics. Marginal cost does not help them in deciding optimal price. Pricing policies and other business strategies must be formulated in such a way that it should ensure active interaction of both groups. Pricing strategy should get both sides on board and should also solve chicken-and-egg problem. Chapter 3 describes the pricing policy adopted by two-sided markets. Chapter 4 deals with relevance of two-sided markets for competition policy. Competition Authorities do not need different set of rules to regulate these industries. However Competition Authorities must consider various economic principles that influence pricing and investment decisions in two-sided markets. Chapter 5 concludes with various observations and suggestions.

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