Sebastian Buhai (@sbuhai.bsky.social)

Competitive Bottlenecks and Platform Spillovers (Forthcoming Article) - We provide a general framework to analyze competition between oligopolistic platforms in competitive bottleneck settings, allowing for pricing and non-price design choices by platforms, and postparticipation buyer-seller decisions. We show that equilibrium choices by platforms are distorted against sellers’ interests in a way harmful to welfare (e.g., setting excessive commission fees), and that an increase in the number of competing platforms can exacerbate this distortion. We also characterize how buyer-side heterogeneity in interaction benefits, partial market coverage, platform asymmetry, and cross-platform spillovers further amplify or mitigate welfare distortions. Based on our findings, we discuss policy implications for mobile app platforms. https://www.aeaweb.org/articles?id=10.1257/mic.20240259&from=f