The Competitive Impacts of Exclusivity and Price Transparency in Markets With Digital Platforms

Paul Belleflamme and Martin Peitz

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: Two-sided digital platforms not only decide about the price structure, but often have non-price instruments at their disposal. Our objective in this article is to review recent work that aims at better understanding the possible pro- or anti-competitive effects of two specific non-price strategies: exclusivity as the contractual obligation to singlehome and price transparency as the disclosure of information about otherwise unobserved prices paid by users on the other side. Regarding the incentives that platforms may have to restrict users from visiting more than one platform at a time, one finding is that when platforms find it profitable to impose exclusivity on one side, users on the other side always suffer. Regarding price transparency in situations in which users on one side may not observe the prices that platforms set on the other side, we find that a monopoly platform is willing to remedy this problem by being transparent about all prices, whereas competing platform would in general prefer more opaqueness. From our findings we derive lessons for competition authorities.

Keywords: platform competition; competitive bottleneck; exclusivity contracts, price disclosure; price transparency (search for similar items in EconPapers)
JEL-codes: L12 L13 L41 L42 (search for similar items in EconPapers)
Pages: 12
Date: 2019-11
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https://www.crctr224.de/research/discussion-papers/archive/dp137

Related works:
Working Paper: The competitive impacts of exclusivity and price transparency in markets with digital platforms (2020)
Working Paper: The competitive impacts of exclusivity and price transparency in markets with digital platforms (2019)
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