To estimate marginal cost in a two sided market
, the costs associated with serving both sides of the market have to be tallied.
ROCHET & TIROLE (2004) compare a two sided market with a vertically related market structure.
The first externality, also present in the telecommunications industry, is the membership externality, whereas usage externality is specific to the two sided market structure.
In such cases it is essential for competition policy to study a two sided market and the strategic behaviour of its players by considering the total price, not the price paid by each side.
They argue that, from a theoretical point of view, it is impossible to apply Coase's theorem (1960) to two sided markets, since the transaction between sellers and buyers takes place only if there is a platform.
DE: The role of the catalyst in a two sided market is to get all customer groups on board.
Two sided markets and regulation (competition policy)
Catalyst Code also debunks many traditional business school theories on pricing, in particular, and illustrates how the application of conventional management theories spells disaster for catalysts and two sided markets
In this case, pricing has all the standard issues associated with two sided markets (ARMSTRONG, 2006; ROCHET & TIROLE, 2006).
7) See ARMSTRONG (2006), ROCHET & TIROLE (2006) for an introduction to two sided markets.
Two sided markets
applied to telecoms would mean that, downstream, there is a relationship between ISPs and consumers, and, upstream, possibly but optionally, contractual relations between ISPs and content or online service providers to offer enhanced managed services.
The Exchange has contracted with two firms to provide two sided markets
for the new contract during daytime hours.