Platform economics and antitrust enforcement: A little knowledge is a dangerous thing

Katz, Michael L. “Platform economics and antitrust enforcement: A little knowledge is a dangerous thing." Journal of Economics & Management Strategy 28.1 (2019): 138-152.[PDF]

==abstract==

Although the economics of multisided platforms has developed important insights for antitrust policy, there are critical respects in which the body of academic knowledge falls short of providing useful advice to enforcement agencies and the courts. Indeed, there is a substantial risk that recent scholarship will be misapplied to the detriment of sound antitrust policy, as evidenced by the US Supreme Court’s recent decision in American Express. In this note, I identify several areas in which economics research could potentially make significant contributions to the practical antitrust treatment of platforms.

“Justice Stephen Breyer’s dissent mocks the majority’s economic reasoning, as will most economists, including the creators of the “two-sided markets” theory on which the court relied. The court used academic citations in the worst way possible — to take a pass on reality.”

—Wu (2018b) commenting on the Supreme Court’s American Express opinion.