Exclusive Dealing in Asymmetric Platform Competition

31 Pages Posted: 14 Jun 2022 Last revised: 4 Nov 2022

See all articles by Jiajia Cong

Jiajia Cong

School of Management, Fudan University

Yao Huang

HKU Business School, The University of Hong Kong

Wen Zhou

University of Hong Kong

Date Written: June 7, 2022

Abstract

This paper studies exclusive dealing imposed on sellers by asymmetric platforms in a setting of cross-side network effects and platform differentiation. We find that exclusivity can be introduced by the strong platform alone, the weak platform alone, or both. In each case, exclusivity appears only when the initiator's service is not very valuable to sellers. Platform asymmetry facilitates the weak platform's adoption of exclusivity and hinders the strong platform's. When few sellers would have multihomed anyway, only the strong platform will introduce exclusivity. This may strengthen the cross-side network effect so much that consumer surplus, social welfare, and sellers' overall profitability all improve. In contrast, welfare and sellers' overall profitability decline when only the weak platform introduces exclusivity.

Keywords: Asymmetric platform competition, multihoming, singlehoming, exclusivity, welfare, regulation policy

JEL Classification: D43, L12, L13, L14, L42

Suggested Citation

Cong, Jiajia and Huang, Yao and Zhou, Wen, Exclusive Dealing in Asymmetric Platform Competition (June 7, 2022). Available at SSRN: https://ssrn.com/abstract=4129788 or http://dx.doi.org/10.2139/ssrn.4129788

Jiajia Cong (Contact Author)

School of Management, Fudan University ( email )

670 Guoshun Road
Yangpu District
Shanghai
China

Yao Huang

HKU Business School, The University of Hong Kong ( email )

Hong Kong
China

Wen Zhou

University of Hong Kong ( email )

1225 KKL Building
Pokfulam Road
Hong Kong
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
116
Abstract Views
362
Rank
355,745
PlumX Metrics