By revisiting the “competitive bottleneck” hypothesis in the context of multi-sided platform competition, this paper shows that the existence of single-homing consumers needs not to raise anti-competitive concerns regarding the behaviour of the online platform running the marketplace, as the nature of the induced competitive effects will critically depend on the specificities of the platforms’ business model. This then suggests that the only sensible way of assessing the likely competitive effects of single-homing in the context of platform competition is a case-by-case approach that captures the heterogeneity of adopted business models as well as the complex competitive dynamics involved. In particular, several reasons justify why hybrid platform marketplaces (i.e. marketplaces run by vertically integrated platforms which operate also as resellers) would not be able to extract high fees from third-party sellers and from consumers even if a significant proportion of the latter decided to patronize a single gatekeeper platform.
By Neil Dryden, Jorge Padilla & Helder Vasconcelos1
The growing digitalization of the economy has led to the emergence of new business models, based on multi-sided platforms, which have inspired a relatively recent, but rapidly expanding, strand of the economics literature on the economics of two-sided markets.2
This literature has given rise to many important challenges as far as competition policy enforcement is con!-->…