Quality discrimination in online multi-sided markets

Arbeitspapier

The aim of this paper is to explain evidence of unfair practices by online platforms towards business users, particularly SME's. First, using survey data, we show that sellers operating with four different categories of platforms multi-home (marketplaces, app stores, social networks and online advertising). Hence, the appropriate competitive framework is the "competitive bottleneck" model. Second, we develop an empirical model of platform competition adding an additional dimension: service quality. The results indicate that the costs of providing quality to sellers are higher than the costs of providing quality to buyers. These differences may reflect different needs or preferences across groups. While buyers would require simple functionalities sellers would need more sophisticated services. When sellers' multi-home, platforms care more about buyers than sellers and while buyers will get an efficient level of quality, quality to sellers will be "degraded". We argue that this service quality degradation explain unfair trading practices simply because platforms are not willing to invest to take care of sellers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: JRC Digital Economy Working Paper ; No. 2017-06

Classification and Topics

• Classification: Wirtschaft ; Organizational Behavior; Transaction Costs; Property Rights ; Property Law ; Contract Law ; Information and Internet Services; Computer Software
• Subject: digital single market ; data economy ; online platforms ; multi-sided markets

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Duch-Brown, Néstor
• Event: Veröffentlichung
• (who): European Commission, Joint Research Centre (JRC)
• (where): Seville
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/202228
• Last update: 10.03.2025, 11:43 AM CET