Sherlocking: The Effects of Platform-Owner Entry on the Competitive Behavior of Third-Party Firms

Benjamin T. Leyden

No 12512, CESifo Working Paper Series from CESifo

Abstract: I study how third-party firms respond when a platform owner enters its own marketplace, analyzing Apple's entries into App Store submarkets from 2016-2021. Using text embeddings to define markets and a staggered difference-in-differences design, I find that Apple's entry deters new competitors and shifts incumbents' monetization strategies, but effects vary widely: many markets show no meaningful response, while others move in opposing directions across a host of monetization and quality outcomes. Responses depend on how Apple enters and apps' competitive proximity to Apple. This heterogeneity suggests targeted oversight rather than categorical restrictions on platform-owner entry.

Keywords: digital marketplaces; platform-owner entry; app store; platform regulation (search for similar items in EconPapers)
JEL-codes: L13 L40 L86 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12512

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