Monday, July 27, 2020
Should Amazon be allowed to sell on its own marketplace?
Andrei Hagiu, Tat-How Teh, Julian Wright
May 6, 2020
A growing number of intermediaries (e.g. Amazon, Apple's Appstore, and Walmart) act
as resellers on their own marketplaces. We build a model of dual marketplace and reseller
intermediation to explore the implications of this practice, and the call to ban it, taking
into account an intermediary's optimal choice of mode. Our analysis shows that an outright
ban tends to benet third-party sellers at the expense of consumer surplus or welfare, even
after allowing for innovation by third-party sellers. Rather than an outright ban, we show
that policies that limit the imitation of highly innovative third-party products and prevent
steering of buyers to the intermediary's own products would lead to preferable outcomes.