Market Power and Mergers in Multi-Sided Markets

This paper generalizes market power measures for evaluating multi-sided markets. In addition, existing estimation techniques for determining the effects of multi-product sellers and mergers are generalized to multi-sided markets. Unlike traditional onesided products, the integration of platform network externalities by a multi-platform seller affects platform pricing. For example, the integration of Facebook and Instagram profiles by Facebook Inc. might improve the network externalities between social media users and advertisers, which affects pricing and competition with other social media platforms such as Snapchat. An application of the theoretical findings to the sixth generation video game market demonstrates the importance of using these generalized techniques instead of traditional one-sided approaches, when considering platform market power and platform mergers.