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http://hdl.handle.net/2451/29487
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| Title: | A SSNIP Test for Two-sided Markets: The Case of Media |
| Authors: | Filistrucchi, Lapo - Tilburg University and University of Siena |
| Keywords: | two-sided markets, SSNIP test, Hypothetical Monopolist test, critical
loss analysis, critical elasticity analysis, market definition, media |
| Issue Date: | 2008 |
| Series/Report no.: | Net Institute Working Paper;08-34 |
| Abstract: | I discuss the design and implementation of a SSNIP test in order to
identify the relevant market in a media market. I argue that in such a
two-sided market the traditional SSNIP test cannot be applied as it is
usually conceived but rather should be modified in order to take into
account indirect network externalities. I discuss the issues of which
price the hypothetical monopolist should be thought of as raising, of
whether we should look at profits changes on only one side or on both
sides of the market and of which feedback among the two sides of the
market we should take into account. I then derive the relevant formulas
for Critical Loss Analysis. These look much uglier than in a
single-sided market but in fact they are easy to calculate as they are
still expressed in terms of elasticities and of current observed
markups, prices and quantities. Data requirements are however higher as
one needs to estimate the matrixes of the own and cross price
elasticities of demand on the two-sides of the market and the matrixes
of the network effects. The paper fills a gap in the economic
literature, so much more as market definition in media markets is at the
centre of many recent competition policy and regulation cases around the world. |
| URI: | http://hdl.handle.net/2451/29487 |
| Appears in Collections: | NET Institute Working Papers Series
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