e‐Commerce platforms and self‐preferencing

Abstract

I review the literature on eCommerce platforms with particular emphasis on the antitrust debate on Amazon. The business model of hybrid marketplaces is based on monetization through fees on third party sellers hosted on the platform and direct margins on own products. Recent theoretical and empirical work on endogenous marketplace structures has analyzed the welfare impact of the dual mode and of recommendation algorithms that have been associated with self‐preferencing strategies. The trade offs are complex and one cannot easily conclude that Amazon entry is biased to expropriate third party sellers or that a ban on dual mode, self‐preferencing or copycatting would benefit consumers.