Self-preferencing, Quality Provision, and Welfare in Mobile Application Markets

Xuan Teng
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Xuan Teng: LMU Munich

No 434, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Platforms often display their products ahead of third-party products in search. Is this due to consumers preferring platform-owned products or platforms engaging in self-preferencing by biasing search towards their own products? What are the welfare implications? I develop a structural model of mobile application markets to identify self-preferencing and quantify its welfare effects, taking into account third-party developers' quality adjustment. A new dataset on app downloads, prices, characteristics, and search rankings is used to estimate the model. Estimates indicate self-preferencing. Simulations show higher consumer welfare and third-party profits without self-preferencing.

Keywords: competition policy; platform design; consumer search; endogenous product choice (search for similar items in EconPapers)
JEL-codes: D12 D83 L13 L86 (search for similar items in EconPapers)
Date: 2023-10-23
New Economics Papers: this item is included in nep-com, nep-ind, nep-pay and nep-reg
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