Essays on the Industrial Organization of Digital Platform Markets

Abstract

Digital platforms provide an infrastructure that facilitates user interaction, for example, digital marketplaces that manage trade between consumers and sellers. On these platforms, both user groups value a strong presence of their counterparts. This interrelation between market sides causes a coordination problem that platforms face during their launch phase. In the second chapter of the dissertation, this coordination problem is captured and it is shown how a platform might overcome it through an optimal information strategy. Platforms with larger user bases provide higher value to their users, leading to market concentration around a few established platforms. Given the tendency toward concentration, consequently a platform duopoly and a platform monopoly are considered. The strategic decisions of these platforms influence the set of actions available to sellers. In the third chapter of the dissertation, I examine under what circumstances platforms require sellers to offer their products exclusively on their platform and analyze the implications of exclusivity clauses. In the fourth chapter, it is analyzed whether a platform has an incentive to share data on consumer preferences with sellers, thereby shaping the competitive dynamics in the marketplace. Additionally, it is investigated how these data-sharing incentives change when the platform becomes active as a seller in its own marketplace. Finally, the results are summarized and an outlook is provided.