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The competitive impacts of exclusivity and price transparency in markets with digital platforms

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  • BELLEFLAMME, Paul,

    (Université catholique de Louvain, CORE, Belgium)

  • PEITZ, Martin,

    (Universität Mannheim)

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.

Suggested Citation

  • BELLEFLAMME, Paul, & PEITZ, Martin,, 2019. "The competitive impacts of exclusivity and price transparency in markets with digital platforms," LIDAM Discussion Papers CORE 2019019, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2019019
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2019.html
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. An introduction to the economics of platform competition – Part 3
      by Paul Belleflamme in IPdigIT on 2020-04-21 06:19:10

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    Cited by:

    1. Juan Manuel Sanchez‐Cartas & Gonzalo León, 2021. "Multisided Platforms And Markets: A Survey Of The Theoretical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 452-487, April.
    2. Pierre-Jean Benghozi & Françoise Benhamou, 2021. "Media and the Internet Access Providers in an Era of Convergence," Post-Print halshs-03503861, HAL.

    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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