Private Labels in Marketplaces

Radostina Shopova ()
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Radostina Shopova: https://econ.univie.ac.at

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: This paper investigates the implications of vertical integration with private labels in the marketplace model opposed to the classic wholesale model. Differently from classic retailers, on a marketplace firms set end-consumer prices and the intermediary collects fees. When introducing a lower-quality version of a product, a marketplace owner does not have an incentive to increase the cost of the outside seller and foreclose him. In order to protect revenues from the seller channel, a marketplace owner overprices his product, compared to a retailer or stand-alone monopolist, and decreases the fee. I demonstrate that offering a lower quality is indeed optimal for both marketplace owner and classic retailer, with the former differentiating more from the seller's offering. This harms the seller less, but improves the consumer surplus less compared to a retailer.

JEL-codes: D21 D40 L12 L22 L42 L81 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:vie:viennp:vie2104

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