Project description
A closer look at e-commerce giants
Online platforms, such as Amazon, Alibaba and Google, have grown into e-commerce giants. They are an important part of the digital economy, generating billions of euros in net sales. The EU regulation on fairness and transparency in online platform-to-business relationships puts in place a harmonised framework for minimum transparency and redressing rights. The EU-funded DIPVAR project will investigate effective policy recommendations for competition policy in digital markets that can greatly improve consumer welfare in the EU. It will develop models of markets with digital platforms and review implications of digital platforms' business practices on prices, variety and quality provision to buyers, on small rivals, and on potential platform entry. The findings will shed light on potential distortions in these enormously lucrative markets.
Objective
Digital platforms, such as Amazon, Alibaba, Google, have become important global players. Their practices have led to significant anti-trust and regulatory scrutiny, and interventions. The existing theoretical models are not suited for the analysis of most of digital platforms as they fail to capture their important aspects and dynamics. This project’s first goal is to develop tractable and applicable models of markets with digital platforms capturing their unique features. The second goal is to investigate the implications of digital platforms’ business practices on prices, variety and quality provision to buyers, on small rivals, and on potential platform entry. I plan to attain these goals via two work packages: WP1 will provide a tractable framework capturing important characteristics of online market places and can thus be used to analyze e-commerce platforms’ optimal seller contracts and the implied variety offered to consumers. After illustrating an equivalence between a trade platform and a multiproduct monopolist, WP1 will identify with which demand systems and information structure multiproduct firms under-/over-provide variety. Using equivalence conditions WP1 will study whether, how, and when the variety implied by platforms’ pricing diverges from the social optimality and which type of seller contracts could mitigate such distortions. WP2 will provide tractable and applicable models to study competition between asymmetric platforms to attract high quality sellers. WP2 will analyze how platforms’ restrictions on users multi-homing (participating in multiple platforms) and restrictions on switching behavior of users affect market allocation, quality provision, prices, entry and dynamics. The findings of this project will highlight potential distortions in these multi-billion markets and ultimately suggest effective policy recommendations for competition policy in digital markets, which can greatly improve consumer welfare in the EU.
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Funding Scheme
ERC-STG - Starting GrantHost institution
50014 Fiesole
Italy