Self-Preferencing in Markets with Vertically-Integrated Gatekeeper Platforms

24 Pages Posted: 23 Nov 2020

See all articles by Jorge Padilla

Jorge Padilla

Compass Lexecon

Joe Perkins

Compass Lexecon

Salvatore Piccolo

University of Bergamo, Compass Lexecon and CSEF

Date Written: September 28, 2020

Abstract

The competitive strategies of `gatekeeper' platforms are subject to enhanced scrutiny. For instance, Apple and Google are being accused of charging excessive access fees to app providers and privileging their own apps. Some have argued that such allegations make no economic sense when the platform's business model is to sell devices. In this paper, we build a model in which a gatekeeper device-seller facing potentially saturated demand for its device has the incentive and the ability to exclude from the market third-party suppliers of a service that consumers buy via its devices. Foreclosure is more likely if demand growth for the platform's devices is slow or negative, and can harm consumers if the device-seller's services are inferior to those offered by the third parties.

Keywords: Durable Goods, Foreclosure, Gatekeeper Platforms, Self-Preferencing, Vertical Integration

JEL Classification: D43, K21, L41, L81

Suggested Citation

Padilla, Jorge and Perkins, Joe and Piccolo, Salvatore, Self-Preferencing in Markets with Vertically-Integrated Gatekeeper Platforms (September 28, 2020). Available at SSRN: https://ssrn.com/abstract=3701250 or http://dx.doi.org/10.2139/ssrn.3701250

Jorge Padilla

Compass Lexecon ( email )

Paseo de la Castellana 7
Madrid, 28046
Spain

Joe Perkins

Compass Lexecon ( email )

United States

Salvatore Piccolo (Contact Author)

University of Bergamo, Compass Lexecon and CSEF ( email )

via de caniana 2
24127
Bergamo, BG 24127
Italy

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