Work

Hybrid platform model: monopolistic competition and a dominant firm

Year: 2024

Type: article

Abstract: We model a platform controlling the variety and prices of the products it hosts via a percentage fee on sellers and choosing whether to sell its own products (hybrid mode). We derive a mixed market demand system for differentiated products with monopolistically competitive sellers and a sizeable platform product range. The hybrid platform steers consumers toward its products by charging higher seller fees than pure marketplace. This “insidious steering” intensifies the larger the platform's product footprint. Hybrid mode harms consumers compared to pure marketplace unless fringe entry is sufficiently inelastic.

Source: The RAND Journal of Economics

DOI: 10.1111/1756-2171.12478

Authors: Simon Anderson, Özlem Bedre Defolie

Institutions: Center for Economic and Policy Research, University of Virginia, European University Institute

Language: English

Topic: Digital Platforms and Economics

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,400

OpenAlex ID: W4403991064

FWCI: 10.91

Cites: 40

Cited by: 37

Related to: 10