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Journal Article

When do markets tip? An overview and some insights for policy

Journal of European Competition Law and Practice 11 (10): 610–622
Özlem Bedre-Defolie, Rainer Nitsche (2020)
Economics, politics and business environment
Platforms, tipping, dynamic competition
Multi-sided platform markets have tendency to “tip”, that is, one MSP takes it all or dominates the market by far. Due to dynamics of these markets it is however challenging to identify which markets will tip and the characteristics of tipping candidates ex-ante (before tipping). The European Commission has expressed the need for a new competition tool to identify and assess the likelihood of tipping. Based on a review of factors that foster and mitigate tipping we propose four key questions that may help in ranking multi-sided platform markets by the likelihood of tipping. Tipping is less likely if there are factors that 1) diminish the value of a growing multi-sided platform, 2) ease smaller rivals’ user acquisition, 3) make smaller rivals attractive to at least some users, and 4) make none of the established platforms stronger via activities in another market.
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