### Abstract

Original language | English |
---|---|

Place of Publication | Tilburg |

Publisher | TILEC |

Number of pages | 28 |

Volume | 2012-029 |

Publication status | Published - 2012 |

### Publication series

Name | TILEC Discussion Paper |
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Volume | 2012-029 |

### Fingerprint

### Keywords

- Merger evaluation
- two-sided markets
- network effects
- UPP

### Cite this

*Upward Pricing Pressure in Two-Sided Markets*. (TILEC Discussion Paper; Vol. 2012-029). Tilburg: TILEC.

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**Upward Pricing Pressure in Two-Sided Markets.** / Affeldt, P.; Filistrucchi, L.; Klein, T.J.

Research output: Working paper › Discussion paper › Other research output

TY - UNPB

T1 - Upward Pricing Pressure in Two-Sided Markets

AU - Affeldt, P.

AU - Filistrucchi, L.

AU - Klein, T.J.

N1 - This is also CentER Discussion Paper 2012-069 Pagination: 28

PY - 2012

Y1 - 2012

N2 - Abstract: Pricing pressure indices have recently been proposed as alternative screening devices for horizontal mergers involving differentiated products. We extend the concept of Upward Pricing Pressure (UPP) proposed by Farrell and Shapiro (2010) to two-sided markets. Examples of such markets are the newspaper market, where the demand for advertising is related to the number of readers, and the market for online search, where advertising demand depends on the number of users. The formulas we derive are useful for screening mergers among two-sided platforms. Due to the two-sidedness they depend on four sets of diversion ratios that can either be estimated using market-level demand data or elicited in surveys. In an application, we evaluate a hypothetical merger in the Dutch daily newspaper market. Our results indicate that it is important to take the two-sidedness of the market into account when evaluating UPP.

AB - Abstract: Pricing pressure indices have recently been proposed as alternative screening devices for horizontal mergers involving differentiated products. We extend the concept of Upward Pricing Pressure (UPP) proposed by Farrell and Shapiro (2010) to two-sided markets. Examples of such markets are the newspaper market, where the demand for advertising is related to the number of readers, and the market for online search, where advertising demand depends on the number of users. The formulas we derive are useful for screening mergers among two-sided platforms. Due to the two-sidedness they depend on four sets of diversion ratios that can either be estimated using market-level demand data or elicited in surveys. In an application, we evaluate a hypothetical merger in the Dutch daily newspaper market. Our results indicate that it is important to take the two-sidedness of the market into account when evaluating UPP.

KW - Merger evaluation

KW - two-sided markets

KW - network effects

KW - UPP

M3 - Discussion paper

VL - 2012-029

T3 - TILEC Discussion Paper

BT - Upward Pricing Pressure in Two-Sided Markets

PB - TILEC

CY - Tilburg

ER -