Network Effects and Two-sided Markets, July 2007

Network effects and two (or multi)-sided markets, are playing an increasing role in competition law and the regulation of the communications and finance sectors. They have recently been applied to investigations into computer hardware and software, Computer Ticketing Services (CRS), Automated Teller Machines (ATMs) and credit card schemes; and in the evaluation of mergers and industry  standards. This paper sets out and applies the economics of network effects to introduce the lawyer and non-economist of this important development in competition economics. The paper is a module for the Kings College, University of London Postgraduate Diploma/Masters in Economics in Competition Law, 2006/2007 written by Cento Veljanovski who is one of the Course Tutors.  It is available online at the SSRN website.

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