Competing Multiproduct Intermediaries

Abstract

This paper develops a new framework to analyze asymmetric competition between multiproduct intermediaries that offer a range of product categories. It highlights a novel interplay between vertical and horizontal marginalization. Vertical marginalization arises from within-and cross-channel interactions between intermediaries and producers, and is further amplified by horizontal marginalization, driven by Cournot miscoordination among producers selling through a common intermediary. We analyze the distinct mechanisms underlying this interplay across different business models and examine how heterogeneous intermediary buyer power shapes retail competition and consumer welfare.

Keywords: Multiproduct intermediary, buyer power, vertical marginalization