Antitrust and Unfair Competition Law

Competition: Fall 2020, Vol 30, No. 2

THE SIMPLE ECONOMICS OF HYBRID MARKETPLACES

By Neil Dryden, Sergey Khodjamirian, and Jorge Padilla1

ABSTRACT

This article explains that that the decision of a marketplace to operate its own reseller in competition with third-party sellers within the platform is likely to spur competition to the ultimate benefit of consumers. A marketplace will profit by supplying directly as a reseller when that duality is needed to (a) achieve selection parity with other distribution channels and/or (b) prod third-party sellers to compete more aggressively. The success of a hybrid marketplace (i.e., an online business that is both a marketplace and a reseller operating in that marketplace) may require it to support its retail operations in order to increase the appeal of its store vis-à-vis other stores. The effect of such strategy on the incentives to innovate of other sellers in the marketplace is in principle ambiguous but the available evidence suggests it may be positive.

KEYWORDS: antitrust, business models, hybrid marketplaces, regulation

Join CLA to access this page

Join

Log in

Forgot Password

Enter the email associated with you account. You will then receive a link in your inbox to reset your password.

Personal Information

Select Section(s)

CLA Membership is $99 and includes one section. Additional sections are $99 each.

Payment