Raising Rivals' Costs on Hybrid Platforms: The Complementarity of Fees and Self-Preferencing

Abstract

Hybrid platforms disadvantage third-party sellers through the platform fee and self-preferencing, and regulators have worried that constraining either instrument may intensify the other. We model a platform that chooses both instruments and find the opposite: single-instrument regulation is effective because the instruments are strategic complements, and regulating either instrument curbs the other. We also find that the two instruments achieve what monopolization achieves, higher prices and reduced consumer welfare, while passing every conventional antitrust test.