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Retailer-led Marketplaces

Author

Listed:
  • Hervas-Drane, Andres
  • Shelegia, Sandro

Abstract

Leading retailers have opened up their online storefronts to competitors by operating marketplaces for third party sellers. We develop a model of entry and price competition at the product market level, and show that the retailer softens competition through control of the storefront and beneï¬ ts from third party sellers by learning about products and mitigating his own capacity constraints. We examine policy interventions and ï¬ nd that regulation of marketplace fees has the strongest potential to increase welfare outcomes. Our model provides novel insights into the mechanisms at play in retailer-led marketplaces and explains their prominent role in online retail.

Suggested Citation

  • Hervas-Drane, Andres & Shelegia, Sandro, 2022. "Retailer-led Marketplaces," CEPR Discussion Papers 17351, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17351
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    Citations

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    Cited by:

    1. Federico Etro, 2023. "Hybrid Marketplaces with Free Entry of Sellers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(2), pages 119-148, March.
    2. Etro, Federico, 2023. "Platform competition with free entry of sellers," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    3. Federico Etro, 2021. "Product selection in online marketplaces," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(3), pages 614-637, August.
    4. Radostina Shopova, 2021. "Private Labels in Marketplaces," Vienna Economics Papers vie2104, University of Vienna, Department of Economics.

    More about this item

    Keywords

    Product entry; Price competition; Marketplace fees; Buy box; Observational learning; Product assortment;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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