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Online trade platforms: Hosting, selling, or both?

Author

Listed:
  • Anderson, Simon
  • Bedre-Defolie, Özlem
Abstract
We illustrate conditions under which a trade platform selling its own products alongside third-party sellers benefits or harms consumers. This benefits consumers by lowering prices in a suite of models: a gatekeeper platform facing a competitive fringe of sellers, when fringe sellers also have their own channels perfectly or imperfectly substitutable to the platform; when the gatekeeper platform with fringe sellers competes against a big seller with market power on a differentiated alternative channel; and when the gatekeeper platform hosts only a big seller with market power. Platform product entry might harm consumers when a big firm sells both on the platform and on its alternative channel. The platform selling its own products harms consumers when consumers have heterogenous tastes for variants of products and the platform can control the access of fringe sellers via its commission and own product price. We also review the recent literature to highlight other channels via which benefits and harm arise from the platform selling its own products in its marketplace.

Suggested Citation

  • Anderson, Simon & Bedre-Defolie, Özlem, 2022. "Online trade platforms: Hosting, selling, or both?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 84, pages 1-15.
    • Handle: RePEc:zbw:espost:266037
    DOI: 10.1016/j.ijindorg.2022.102861
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    Citations

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    Cited by:

    1. Johannes Muthers & Sebastian Wismer, 2012. "Why Do Platforms Charge Proportional Fees? Commitment and Seller Participation," Working Papers 115, Bavarian Graduate Program in Economics (BGPE).
    2. Federico Etro, 2023. "Hybrid Marketplaces with Free Entry of Sellers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(2), pages 119-148, March.
    3. Federico Etro, 2024. "e‐Commerce platforms and self‐preferencing," Journal of Economic Surveys, Wiley Blackwell, vol. 38(4), pages 1516-1543, September.
    4. Belleflamme, Paul & Johnen, Johannes, 2023. "Non-Price Strategies of Marketplaces: A Survey," LIDAM Discussion Papers CORE 2023015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Muthers Johannes & Wismer Sebastian, 2022. "Why Do Platforms Charge Proportional Fees? Commitment and Seller Participation," Review of Network Economics, De Gruyter, vol. 21(2), pages 83-110, August.
    6. Saruta, Fuyuki, 2023. "Private labels and platform competition," MPRA Paper 119585, University Library of Munich, Germany.
    7. Poddar, Sangita & Banerjee (Chatterjee), Tanmoyee, 2024. "Hybrid role of two-sided platform with one-sided congestion," Research in Economics, Elsevier, vol. 78(1), pages 83-98.
    8. Luca Sandrini & Robert Somogyi, 2022. "News Media Bargaining Codes," Working Papers 22-06, NET Institute.
    9. Reimer, Julia, 2024. "Hybrid Platforms and Innovation Incentives," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302444, Verein für Socialpolitik / German Economic Association.
    10. Shopova, Radostina, 2023. "Private labels in marketplaces," International Journal of Industrial Organization, Elsevier, vol. 89(C).

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    More about this item

    Keywords

    Trade platform; Steering; Hybrid business model; Regulation;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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