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Areeda-turner in two-sided markets

Behringer,S.
; 
Filistrucchi,L.
Abstract
We extend the Areeda–Turner rule to two-sided markets. We show that a two-sided monopolist may find it short-run profit-maximizing to charge a price below marginal cost on one side of the market. Hence showing that the price is below marginal cost on one side of a two-sided market cannot be considered a sign of predation. We then argue for a two-sided Areeda–Turner rule that takes into account price-cost margins on both sides of the market. Two examples highlight that applying a one-sided Areeda–Turner rule may lead one to assess legitimate prices as predatory or to consider predatory prices as legitimate.
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Date
2015
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Tilburg University Research Output Collection
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Keywords
daily newspapers, market definition, network effects, predation, two-sided markets, L12 - Monopoly ; Monopolization Strategies, L41 - Monopolization ; Horizontal Anticompetitive Practices, L82 - Entertainment ; Media
Citation
Behringer, S & Filistrucchi, L 2015, 'Areeda-turner in two-sided markets', Review of Industrial Organization, vol. 46, no. 3, pp. 287-306. https://doi.org/10.1007/s11151-015-9460-5
URI
https://hdl.handle.net/20.500.14602/63280
License
info:eu-repo/semantics/openAccess
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