Competitive Effects of Exclusive Dealing Strategy on E-commerce Platforms: A Dynamic Duopoly Game
As a controversial competitive strategy of platform manufacturers, exclusive dealing is getting more and more attention from anti-monopoly law enforcement agency. However, considering the unique features of two-sided market such as cross-network externality, how to identify the competitive effect of exclusive dealing has become an important and difficult problem. Referring to the specific facts of the exclusive dealing agreement, we design a two-stage game framework on the basis of Hotelling model for duopoly e-commerce, and compare the changes of market structure, bilateral user welfare and platform profit at equilibrium. The results show that the exclusive dealing agreement signing between platform and sellers reduces the utility of single-homing and multi-homing consumers, and may also reduce the utility of the sellers in the market. Besides, not only does it reduce the other platform's profits, but more importantly, it doesn't make more profits for itself. Finally, we try to explain the results from the perspective of economics, and provide theoretical support for regulators to formulate platform economy anti-monopoly policy scientifically.
Liu, Yixuan and Zhu, Lei, "Competitive Effects of Exclusive Dealing Strategy on E-commerce Platforms: A Dynamic Duopoly Game" (2022). WHICEB 2022 Proceedings. 49.