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

Author

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  • Benjamin T. Leyden

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.

Suggested Citation

  • Benjamin T. Leyden, 2026. "Sherlocking: The Effects of Platform-Owner Entry on the Competitive Behavior of Third-Party Firms," CESifo Working Paper Series 12512, CESifo.
    • Handle: RePEc:ces:ceswps:_12512
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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