Work

Competitive Bottlenecks and Platform Spillovers

Year: 2026

Type: article

Abstract: We provide a general framework to analyze competition between oligopolistic platforms in competitive bottleneck settings, allowing for pricing and nonprice design choices by platforms, and post-participation buyer-seller decisions. We show that equilibrium choices by platforms are distorted against sellers’ interests in a way harmful to welfare (e.g., setting excessive commission fees), and that an increase in the number of competing platforms can exacerbate this distortion. We also characterize how buyer-side heterogeneity in interaction benefits, partial market coverage, platform asymmetry, and cross-platform spillovers further amplify or mitigate welfare distortions. Based on our findings, we discuss policy implications for mobile app platforms. (JEL D43, L13, L25, L96)

Source: American Economic Journal Microeconomics

DOI: 10.1257/mic.20240259

Authors: Tat-How Teh, Julian Wright

Institutions: Nanyang Technological University, National University of Singapore

Language: English

Topic: Digital Platforms and Economics

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W4393955754

FWCI:

Cites: 63

Cited by: 9

Related to: 10