Raising Rivals' Costs on Hybrid Platforms: The Complementarity of Fees and Self-Preferencing

2026-08-03

AI Summary

This study addresses the dual exclusionary practices—charging fees and self-preferencing—employed by hybrid platforms to the detriment of third-party sellers, noting regulatory concerns that curbing one practice may intensify abuse of the other. By developing a game-theoretic model in which platforms simultaneously choose both strategies, and integrating insights from industrial organization theory and strategic analysis, the paper demonstrates that these practices are strategic complements rather than substitutes. The analysis shows that a single regulatory instrument can effectively mitigate both forms of exclusionary conduct, challenging conventional antitrust paradigms. Moreover, the platform can leverage this strategic combination to achieve monopoly-like outcomes—raising prices and reducing consumer welfare—while evading standard antitrust scrutiny.

Abstract

Hybrid platforms disadvantage third-party sellers through the platform fee and self-preferencing, and regulators have worried that constraining either instrument may intensify the other. We model a platform that chooses both instruments and find the opposite: single-instrument regulation is effective because the instruments are strategic complements, and regulating either instrument curbs the other. We also find that the two instruments achieve what monopolization achieves, higher prices and reduced consumer welfare, while passing every conventional antitrust test.

Problem

• hybrid platforms
• platform fees
• self-preferencing
• antitrust
• consumer welfare

Innovation

• strategic complements
• platform regulation
• self-preferencing
• platform fees
• antitrust