Antitrust in two-sided markets: Is competition always desirable? The case of a satellite broadcasting network with mono- poly power
Year: 2010
Type: preprint
Abstract: The main objective of antitrust interventions is to assure competition in markets to benefit consumers. This paper challenges this common ap- proach by examining the case of a satellite broadcasting network with monopoly power. First, Satellite TV is identified as a two-sided market. It is then analyzed in the framework of the canonical model for two- sided markets developed by Rochet & Tirole (2004). The main finding is that the satellite network maximizes his profits by choosing a price formation which maximizes the overall welfare of all market partici- pants. Even if the satellite network uses his monopoly power to intro- duce a fee to receive satellite TV, it would do so only until the semi- elasticity of the amount of consumers in regard to the per-interaction- price equals the one of the TV stations - exactly the point where wel- fare is maximized. It is therefore concluded that antitrust cases have to take a more in-depth look at two-sided markets before deciding that competition is best for consumers.
Source: SSRN Electronic Journal
Author: Ingo Fiedler
Institution: University of California, Berkeley
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2189159931