The Role of the Marketplace Operator in Inducing Competition

Tiffany Ding, Dominique Perrault-Joncas, Orit Ronen, Michael I. Jordan, Dirk Bergemann, Dean Foster and Omer Gottesman

Papers from arXiv.org

Abstract: The steady rise of e-commerce marketplaces underscores the need to study a market structure that captures the key features of this setting. To this end, we consider a price-quantity Stackelberg duopoly in which the leader is the marketplace operator and the follower is an independent seller. The objective of the marketplace operator is to maximize a weighted sum of profit and a term capturing positive customer experience, whereas the independent seller solely seeks to maximize their own profit. Furthermore, the independent seller is required to share a fraction of their revenue with the marketplace operator for the privilege of selling on the platform. We derive the subgame-perfect Nash equilibrium of this game and find that the equilibrium strategies depend on the assumed rationing rule. We then consider practical implications for marketplace operators. Finally, we show that, under intensity rationing, consumer surplus and total welfare in the duopoly marketplace is always at least as high as under an independent seller monopoly, demonstrating that it is socially beneficial for the operator to join the market as a seller.

Date: 2025-03
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2503.06582 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2503.06582

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().