Private labels and platform competition

Fuyuki Saruta

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines the degree and manner by which first-party selling by a platform affects the profits of a third-party seller and a competing platform. After developing a model in which a third-party seller distributes goods through two competing platforms, with only one platform able to have a private label, we analyze first-party selling effects in both monopoly and duopoly platform cases. Our findings demonstrate the following. In a monopoly case, a platform consistently reduces the seller fee when introducing a private label. In a duopoly case, the two platforms will jointly raise or lower fees upon private label introduction. Additionally, first-party selling can either positively or negatively affect the competing platform's profit. Results suggest that competition among platforms might upset the influence of first-party selling on commission fees. Consequently, platforms might opt for first-party selling as a strategy to weaken commission fee competition and retail competition.

Keywords: First-party selling; Platform competition; Marketplaces; Agency contracts; Wholesale contracts (search for similar items in EconPapers)
JEL-codes: D21 L13 L22 (search for similar items in EconPapers)
Date: 2023-12-27
New Economics Papers: this item is included in nep-com, nep-cta, nep-gth, nep-ind, nep-mic, nep-pay and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:119585

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