Upward Pricing Pressure in Two-Sided Markets: Incorporating Rebalancing Effects
Journal article, Peer reviewed
Accepted version
Permanent lenke
https://hdl.handle.net/11250/2990990Utgivelsesdato
2021Metadata
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- Department of Economics [287]
- Registrations from Cristin [9489]
Originalversjon
International Journal of Industrial Organization. 2021, 74, 102692. https://doi.org/10.1016/j.ijindorg.2020.102692Sammendrag
In two-sided markets it is important to consider rebalancing effects following a merger, i.e. the impact of a change in margin on one side of the market, either due to a price change or to efficiency gains, on the pricing incentives on the other side. We propose modified versions for the indices of pricing pressure (UPP and GUPPI) that take this into account. We show that in two-sided markets where the cross-group externalities are positive the upward pricing pressure will typically be overstated if the rebalancing effect is ignored. Our approach explains why competition agencies should look at both sides of the market when assessing platform mergers.