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AbstractWhenever agents to a transaction (for example, consumers and suppliers) interact through intermediaries or a 'platform' that is controlled by a third party, the agents are using a two‐sided platform. Two‐sided platforms are common. However, if a two‐sided platform involves network effects, so that participants on one side of the platform care about the number of participants on the other side of the platform, it is a two‐sided market. These markets raise a variety of important issues for economists and policy‐makers. In this article, I briefly explain the nature of two‐sided markets and, using simple examples, show how they can behave very differently to standard one‐sided markets.

The Dawson Committee is currently reviewing Australia's competition laws. This article introduces the Policy Forum and considers how the economics of the law can aid the review.

This Policy Forum highlights the links between the exchange rate and Australia's macroeconomic policy.

Third‐party access to major infrastructure facilities is a key component of National Competition Policy. In many situations, both through state regimes and access undertakings under the new part IIIA of the Trade Practices Act, access will be governed by explicit or implicit rate‐of‐return procedures. Infrastructure assets will be valued and translated into an allowable return for the owners. However, setting allowed returns is only the first part of the regulatory process. This paper uses a simple model to evaluate the 'second‐best' access prices under rate‐of‐return regulation. We show that optimal access prices will depend on the degree of downstream competition. With imperfect price competition and fixed numbers of firms downstream, optimal access prices will 'mimic' downstream competition and reduce downstream profits. With free entry downstream, optimal access pricing should determine an optimal level of downstream participation. We also show that the access provider's incentives to introduce optimal access prices will depend on the degree of vertical integration.