Document ID: ./input/supremecourt_opinions/opinions/17pdf/16-1454_5h26.pdf
Page Number: 7

Cite as:  585 U. S. ____ (2018) 

3 

Opinion of the Court 

nomics  of  Payment  Card  Interchange  Fees,  73  Antitrust
L. J. 571, 580, 583 (2006) (Klein).  For example, no credit-
card  transaction  can  occur  unless  both  the  merchant  and 
the  cardholder  simultaneously  agree  to  use  the  same
credit-card network.  See Filistrucchi 301. 

Two-sided  platforms  differ  from  traditional  markets  in
important ways.  Most relevant here, two-sided platforms
often  exhibit  what  economists  call  “indirect  network  ef-
fects.”    Evans  &  Schmalensee  667.    Indirect  network  ef-
fects exist where the value of the two-sided platform to one
group of participants depends on how many members of a 
different  group  participate.    D.  Evans  &  R.  Schmalensee, 
Matchmakers:  The  New  Economics  of  Multisided  Plat-
forms 25 (2016).  In other words, the value of the services 
that  a  two-sided  platform  provides  increases  as  the  num-
ber of participants on both sides of the platform increases. 
A credit card, for example, is more valuable to cardholders 
when  more  merchants  accept  it,  and  is  more  valuable  to
merchants  when  more  cardholders  use  it.    See  Evans  & 
Noel 686–687; Klein 580, 584.  To ensure sufficient partic-
ipation,  two-sided  platforms  must  be  sensitive  to  the
prices  that  they  charge  each  side.    See  Evans  &  Schma-
lensee  675;  Evans  &  Noel  680;  Muris,  Payment  Card 
Regulation  and  the  (Mis)Application  of  the  Economics  of
Two-Sided  Markets,  2005  Colum.  Bus.  L.  Rev.  515,  532– 
533  (Muris);  Rochet  &  Tirole,  Platform  Competition  in 
Two-Sided  Markets,  1  J.  Eur.  Econ.  Assn.  990,  1013 
(2003).  Raising the price on side A risks losing participa-
tion  on  that  side,  which  decreases  the  value  of  the  plat-
form to side B.  If participants on side B leave due to this
loss in value, then the platform has even less value to side
A—risking  a  feedback  loop  of  declining  demand.    See 
Evans & Schmalensee 675; Evans & Noel 680–681.  Two-
sided  platforms  therefore  must  take  these  indirect  net-
work effects into account before making a change in price 
on  either  side.  See  Evans  &  Schmalensee  675;  Evans  &