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Should platforms be allowed to sell on their own marketplaces?

Author

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  • Andrei Hagiu
  • Tat‐How Teh
  • Julian Wright

Abstract

A growing number of digital platforms operate in a dual mode: running marketplaces for third‐party products, while selling their own products on those marketplaces. We build a model to explore the implications of this controversial practice. We analyze the tradeoffs that arise from a regulatory ban on the dual mode, showing how such a ban can harm consumer surplus and welfare even when the platform would otherwise engage in product imitation and self‐preferencing. In the empirically most relevant scenarios, policies that prevent platform imitation and self‐preferencing generate better outcomes than an outright ban on the dual mode.

Suggested Citation

  • Andrei Hagiu & Tat‐How Teh & Julian Wright, 2022. "Should platforms be allowed to sell on their own marketplaces?," RAND Journal of Economics, RAND Corporation, vol. 53(2), pages 297-327, June.
    • Handle: RePEc:bla:randje:v:53:y:2022:i:2:p:297-327
    DOI: 10.1111/1756-2171.12408
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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