With Darcy W.E. Allen. Available at SSRN.
Abstract: This paper develops a public-choice theory of firm response to multi-sided market collapse and illustrates it through Australia’s news media bargaining regime. When one side of a multi-sided market is unbundled, disintermediated or competed away, the shock can propagate across the platform’s entire business model. This creates an incentive for incumbent firms to reconstruct lost market sides politically by compelling adjacent firms to become substitute funders. Australia’s evolving news media bargaining regime illustrates this mechanism. Because adjacency is a political construction rather than an economic relationship, the regime is unstable: as targeted firms respond, the basis on which they are made to pay must be rebuilt on different grounds.