When do markets tip? An overview and some insights for policyClick here to read the full article online
Competition authorities are increasingly concerned that their tools are not fit to deal with markets with digital multi-sided platforms (MSPs). These markets have a tendency to ‘tip’ in the sense that one MSP takes it all or dominates the market by far. Policymakers, including the EC, are currently considering various initiatives to prevent tipping in markets with MSPs. At least in Europe, general search markets have tipped for Google, and many social media markets have tipped for Facebook. Several regional platform markets, however, did not tip. Examples include real estate, music and video-on-demand streaming, recruitment, video games, delivery services, ridesharing etc. As multi-sided platform (MSP) markets are dynamic and unpredictable, it is challenging to identify which markets tip and the characteristics of tipping candidates ex ante (before tipping). Based on a review of factors that foster and mitigate tipping, the authors propose four key questions that may guide policy makers in the development of methods identifying the likelihood of tipping and interventions to prevent tipping.