Upward pricing pressure in two-sided markets: Incorporating rebalancing effects

Cosnita‐Langlais, Andreea; Johansen, Bjørn Olav; Sørgard, Lars

doi:10.1016/j.ijindorg.2020.102692

Cited by 3 publications

(6 citation statements)

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“…The modified

{AGUPPI}_{1}^{B}

for linear demand, as proposed by Cosnita‐Langlais et al . (2018), is

{AGUPPI}_{italic1}^{B} - D_{italic11}^{BA} \frac{{AGUPPI}_{1}^{A}}{italic2}

. The intuition, following the original interpretation of UPP by Farrell and Shapiro (2010) is that a price increase on side A generates an opportunity cost for side B that alters the incentives for price increases on side B.…”

Section: Using Modified Price Pressure Indices For Unilateral Effectsmentioning

confidence: 98%

“…This has been criticized by Cosnita‐Langlais et al . (2018), who argue that the firm would consider the optimal rate of the prices on both sides, even if it does consider the prices of the other merged firm to be constant. The criticism is not new and is similar to the usual criticism of GUPPI‐like indicators, where full feedback effects across prices should be taken into account when estimating price increases, as in a full simulation (e.g.…”

Section: Using Modified Price Pressure Indices For Unilateral Effectsmentioning

confidence: 99%

“…Under linear demand, the pass-through from prices to cost is equal to one-half. The formulae should be similar as the main assumption when deriving the formulae for the GUPPI for matching platforms is that both prices of the firm increase, as in Cosnita-Langlais et al (2018).…”

Section: Using Modified Price Pressure Indices For Unilateral Effectsmentioning

confidence: 99%

“…In both cases, the issue of simultaneous price increases on both sides of a firm, as argued by Cosnita‐Langlais et al . (2018) for audience markets is addressed, and the corresponding results are presented for the other markets.…”

Section: Introductionmentioning

confidence: 99%

“…We extend their analysis and provide the expressions for transaction and non-transaction matching platforms. In both cases, the issue of simultaneous price increases on both sides of a firm, as argued by Cosnita-Langlais et al (2018) for audience markets is addressed, and the corresponding results are presented for the other markets. This paper is organized as follows.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

A Unified Presentation of Competition Analysis in Two‐sided Markets

Ribeiro

Golovanova

2020

Journal of Economic Surveys

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The goal of this paper is to present quantitative tools to manage competition policy analysis in two‐sided platforms, based on a common framework for transaction and non‐transaction platforms. We explore tools for relevant market definition [Critical Loss Analysis and a small but significant non‐transitory increase in price (SSNIP) test], unilateral effects indicators [Upward Pricing Pressure (UPP) and Gross Upward Pricing Pressure Index (GUPPI)] and tests for exclusionary practices. We review dispersed results in the literature and fill the gaps where appropriate. We highlight the required changes from the usual one‐sided market framework and tools. While discussions of antitrust tools can be found in specialized forums devoted to advances in competition policy analysis, we organize the material in an integrated framework.

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“…The modified

{AGUPPI}_{1}^{B}

for linear demand, as proposed by Cosnita‐Langlais et al . (2018), is

{AGUPPI}_{italic1}^{B} - D_{italic11}^{BA} \frac{{AGUPPI}_{1}^{A}}{italic2}

Section: Using Modified Price Pressure Indices For Unilateral Effectsmentioning

confidence: 98%

Section: Using Modified Price Pressure Indices For Unilateral Effectsmentioning

confidence: 99%

Section: Using Modified Price Pressure Indices For Unilateral Effectsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

A Unified Presentation of Competition Analysis in Two‐sided Markets

Ribeiro

Golovanova

2020

Journal of Economic Surveys

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Hearing On Rethinking the Use of Traditional Antitrust Enforcement Tools in Multi-sided Markets

Pike

2017

SSRN Journal

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Horizontal Merger and Upward Pricing Pressure in a Bertrand-Cournot Model

Huamani¹,

Cardoso²,

Braga³

et al. 2021

Blucher Engineering Proceedings

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The upward pricing pressure (UPP) proposed by Farrell and Shapiro (2010a) is a significant advance in the horizontal merger literature and practice. However, the indicator is designed for a particular pre-merger scenario: the Bertrand-type competition. Here, we propose an indicator for a Bertrand-Cournot duopoly pre-merger scenario, shedding light on this assumption's role in the UPP. Besides, we assess the effect of the degree of product differentiation on UPP. Results indicated that the upward pricing pressure caused by a merger depends on the pre-merger competition, with the Bertrand-Cournot having a higher UPP than the Bertrand scenario. The degree of product differentiation also matters for the UPP -merged firms that produce more homogeneous products have a higher probability of causing upward pricing pressure in post-merger. Our findings help the antitrust authority analyze firms' mergers, indicating that these two features need to be better observed: the pre-merger competition scenario and firms' product differentiation.

show abstract

Upward pricing pressure in two-sided markets: Incorporating rebalancing effects

Cited by 3 publications

References 20 publications

A Unified Presentation of Competition Analysis in Two‐sided Markets

A Unified Presentation of Competition Analysis in Two‐sided Markets

Hearing On Rethinking the Use of Traditional Antitrust Enforcement Tools in Multi-sided Markets

Horizontal Merger and Upward Pricing Pressure in a Bertrand-Cournot Model

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