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The Competitive Impacts of Exclusivity and Price Transparency in Markets With Digital Platforms

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  • Paul Belleflamme
  • Martin Peitz

Abstract

Two-sided digital platforms not only decide about the price structure, but often have non-price instruments at their disposal. Our objective in this article is to review recent work that aims at better understanding the possible pro- or anti-competitive effects of two specific non-price strategies: exclusivity as the contractual obligation to singlehome and price transparency as the disclosure of information about otherwise unobserved prices paid by users on the other side. Regarding the incentives that platforms may have to restrict users from visiting more than one platform at a time, one finding is that when platforms find it profitable to impose exclusivity on one side, users on the other side always suffer. Regarding price transparency in situations in which users on one side may not observe the prices that platforms set on the other side, we find that a monopoly platform is willing to remedy this problem by being transparent about all prices, whereas competing platform would in general prefer more opaqueness. From our findings we derive lessons for competition authorities.

Suggested Citation

  • Paul Belleflamme & Martin Peitz, 2019. "The Competitive Impacts of Exclusivity and Price Transparency in Markets With Digital Platforms," CRC TR 224 Discussion Paper Series crctr224_2019_137, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2019_137
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp137
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. An introduction to the economics of platform competition – Part 3
      by Paul Belleflamme in IPdigIT on 2020-04-21 06:19:10

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    Cited by:

    1. Pierre-Jean Benghozi & Françoise Benhamou, 2021. "Media and the Internet Access Providers in an Era of Convergence," Post-Print halshs-03503861, HAL.
    2. Juan Manuel Sanchez‐Cartas & Gonzalo León, 2021. "Multisided Platforms And Markets: A Survey Of The Theoretical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 452-487, April.

    More about this item

    Keywords

    platform competition; competitive bottleneck; exclusivity contracts; price disclosure; price transparency;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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