Platform Encroachment and Own-Content Bias

40 Pages Posted: 19 Oct 2020 Last revised: 12 May 2021

See all articles by Yusuke Zennyo

Yusuke Zennyo

Graduate School of Business Administration, Kobe University

Date Written: May 12, 2021

Abstract

This paper presents a model of platform encroachment, in which a platform not only acts as an intermediary between consumers and third-party sellers, but also sells its first-party products. When encroaching, the platform chooses between fair and biased search engines. Under the fair search, all products are equally likely to appear in search results, whereas the first-party product is more likely to appear under biased search. Biased encroachment makes the platform impose a lower commission on sellers, which leads to a lower equilibrium price which consequently attracts more consumers. Increased consumer participation can raise seller participation through indirect network externalities.

Keywords: encroachment, first-party selling, intermediary, search biases, two-sided markets

JEL Classification: L1, L4

Suggested Citation

Zennyo, Yusuke, Platform Encroachment and Own-Content Bias (May 12, 2021). Available at SSRN: https://ssrn.com/abstract=3683287 or http://dx.doi.org/10.2139/ssrn.3683287

Yusuke Zennyo (Contact Author)

Graduate School of Business Administration, Kobe University ( email )

2-1 Rokkodai
Nada
Kobe, Hyogo 657-8501
Japan

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