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Regulating Platform Bias: Self-preferencing and Transaction Fees as Strategic Substitutes

Author

Listed:
  • Chang-Koo Chi

    (Yonsei University)

  • Jay Pil Choi

    (Michigan State University)

  • Jong-Hee Hahn

    (Yonsei University)

  • Seongkyun Kim

    (Yonsei University)

Abstract

This paper studies self-preferencing incentives by vertically integrated platforms that operate both marketplaces and affiliated retail businesses. We show that self-preferencing and transaction fees are substitute instruments for profit extraction, implying that restrictions on self-preferencing may induce offsetting increases in transaction fees and thereby generate unintended consequences for consumer welfare. We characterize the platform’s optimal choice of self-preferencing and transaction fees and evaluate the welfare effects of behavioral and structural remedies. We also extend the analysis to settings with platform competition and consumer search, examining how market forces shape self-preferencing incentives and evaluating the robustness of our main results.

Suggested Citation

  • Chang-Koo Chi & Jay Pil Choi & Jong-Hee Hahn & Seongkyun Kim, 2026. "Regulating Platform Bias: Self-preferencing and Transaction Fees as Strategic Substitutes," Working papers 2026rwp-294, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2026rwp-294
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    References listed on IDEAS

    as
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    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • D2 - Microeconomics - - Production and Organizations
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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