On Sellers' Cooperation in Hybrid Marketplaces

Abstract

Hybrid marketplaces, such as Amazon's and Zalando's stores or Apple's and Google's app stores, which distribute their own products and services in competition with those of third-party sellers, play a significant and growing role in the internet economy. This paper shows that such platforms react by lowering the fees charged to sellers and the prices charged to consumers in response to cooperation agreements between third-party sellers: horizontal mergers or collusive agreements. It also shows that cooperation can be pro-competitive when the platform is a vertically integrated gatekeeper, adopts the agency business model, is a close competitor to the third-party sellers it hosts, and observes (or correctly anticipates) the third-party sellers' agreement. The discussion here is of significant policy relevance, since third-party sellers in online marketplaces may find it easier to collude and they may respond to the bargaining power of certain gatekeeper platforms by merging their activities.

Keywords: Antitrust; Collusion; Mergers; Hybrid Marketplace.

JEL Classification: L13; L41; L81.