How Dodd-Frank Hurts the Poor | Bloomberg

Think of any old newspaper. Every day, or every week, it prints up some sheets of paper covered with recent news and advertising, and sells those papers to consumers. Its revenue comes from both the consumers who buy the papers, and the advertisers who pay the papers to display their copy to those readers.

Economists call this “a two-sided market,” and they consider its many variants to be some of the most interesting creatures dotting the economic landscape. That’s because the optimal pricing strategy in a two-sided market is often unclear. Jack up your subscription rates, and fewer subscribers will buy your papers, which means your advertising slots are probably less valuable. But set them too low, and advertisers will start to doubt that subscribers are actually reading the paper, which will also tend to diminish your overall revenue.

That’s just the problem for papers, however; every two-sided market has its own weird and wacky conundrums. Ordinary folks rarely hear about them, because consumers tend to think about only one side of a market, the side closest to them. Regulators, on the other hand, often get very interested in two-sided markets, because their complicated and often opaque pricing leaves ample room for lawmakers and bureaucrats to decide that some price is unfair.

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How Dodd-Frank Hurts the Poor – Bloomberg.