How to Approach the Calculation of Overcharge by Multisided Platforms

The famous (some may say infamous) AMEX decision has introduced and strengthened a great deal of economic jargon into the legal lexicon; “multisided platforms,” “transaction platforms,” “indirect network effects” and “two-sided analysis” quickly come to mind. As is often the case, sometimes such descriptive words precede any precise, scientific definition. What, after all, is a “two-sided analysis?” For that matter, how – formulaically – are indirect network effects defined and measured? Ask any economist and you will likely get an answer; ask another and you will likely get a different one.While there may not yet be textbook levels of consensus on several of these points, there are some common ideas in the literature. In this brief note, we will explore some generally accepted concepts, how they relate to measures of market power, and how they support the calculation of at least one source of antitrust damages, the price overcharge. We will necessarily speak in generalities and “typical” circumstances, which is useful (we think), but it must always be remembered that particular cases come down to particular facts and circumstances