Takshashila Working Paper - Regulating Multi-Sided Platforms - Challenges in the Indian Context

Executive Summary

Multi-sided platforms possess unique characteristics that differentiate them from a normal market structure. The presence of direct and indirect network effects, high switching costs, price parity clauses, vertical integration, and differentiated pricing structures between the two sides of the platform are unique to platforms. Further, regular sources of market power such as high entry barriers, predatory pricing, and mergers and acquisitions work differently in platforms than typical market structures.

This paper discusses the unique features in detail and attempts to show how it can lead to concentration of market power and cause producer and consumer harm. The paper also discusses why the competition law in its present state in India is ill-equipped to deal with platform market structures. The traditional tools available with the regulators are not adequate to regulate these anti-competitive features of platforms.

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