Dual Role Platforms and Search Order Distortion

40 Pages Posted: 4 Feb 2021 Last revised: 18 Jan 2022

See all articles by Yuta Kittaka

Yuta Kittaka

Graduate School of Economics, Kobe University (JSPS Postdoctoral Research Fellow)

Susumu Sato

Institute of Economic Research, Hitotsubashi University

Date Written: January 17, 2022

Abstract

We study the situation wherein consumers’ search order is distorted by a vertically integrated platform that intermediates a third-party seller's product along with selling its own.
The price and welfare effects of search order distortion depend on commission rates. Particularly, the prohibition of search order distortion may harm welfare and consumer surplus when commission rates are high, whereas a vertical separation policy always improve welfare through lower prices. This result sheds lights on a potential risk of the policy that requires dominant platforms to be neutral while allowing them to sell on the marketplaces.

Keywords: consumer search, dual role platform, search order distortion, self-preferencing, structural separation

JEL Classification: D11, D83, L13, L49

Suggested Citation

Kittaka, Yuta and Sato, Susumu, Dual Role Platforms and Search Order Distortion (January 17, 2022). Available at SSRN: https://ssrn.com/abstract=3736574 or http://dx.doi.org/10.2139/ssrn.3736574

Yuta Kittaka (Contact Author)

Graduate School of Economics, Kobe University (JSPS Postdoctoral Research Fellow) ( email )

Hyogo Prefecture
Japan

Susumu Sato

Institute of Economic Research, Hitotsubashi University ( email )

Tokyo
Japan

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