Online trade platforms: hosting, selling, or both?

22 Pages Posted: 4 Apr 2022

See all articles by Simon Anderson

Simon Anderson

University of Virginia (UVA), College of Arts and Sciences, Department of Statistics, Students

Özlem Bedre-Defolie

European School of Management and Technology; European University Institute - Economics Department (ECO); European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Centre for a Digital Society; Centre for Economic Policy Research (CEPR); University of Bergen

Date Written: March 13, 2022

Abstract

We illustrate conditions under which a trade platform selling its own products along with third-party sellers benefits or harms consumers. This benefits consumers by lowering prices in a suite of models: a gatekeeper platform facing competitive fringe of sellers, when fringe sellers can also have their own channels perfectly or imperfectly substitutable to the platform, when the gatekeeper platform with fringe sellers competes against a big seller with market power on a differentiated alternative channel, and when the gatekeeper platform hosts only a big seller with market power. The platform selling its own products harms consumers when consumers have heterogenous tastes for variants of products and the platform can control the access of fringe sellers via its commission and own product price. We also review the recent literature to highlight other channels via which benefits and harm arise from the platform selling its own products in its marketplace.

Keywords: Trade platform, hybrid business model, steering, regulation

JEL Classification: D42, L12, L13, L40, H25

Suggested Citation

Anderson, Simon and Bedre-Defolie, Özlem, Online trade platforms: hosting, selling, or both? (March 13, 2022). Available at SSRN: https://ssrn.com/abstract=4056493 or http://dx.doi.org/10.2139/ssrn.4056493

Simon Anderson

University of Virginia (UVA), College of Arts and Sciences, Department of Statistics, Students ( email )

VA
United States

Özlem Bedre-Defolie (Contact Author)

European School of Management and Technology ( email )

European University Institute - Economics Department (ECO) ( email )

Villa La Fonte
Via delle Fontanelle 18
Florence, Fiesole 50014
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Centre for a Digital Society ( email )

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of Bergen ( email )

Muséplassen 1
N-5008 Bergen, +47 55 58
Norway

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