American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Competitive Bottlenecks and Platform Spillovers
American Economic Journal: Microeconomics
(pp. 1–35)
Abstract
We provide a general framework to analyze competition between oligopolistic platforms in competitive bottleneck settings, allowing for pricing and nonprice design choices by platforms, and post-participation 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.Citation
Teh, Tat-How, and Julian Wright. 2026. "Competitive Bottlenecks and Platform Spillovers." American Economic Journal: Microeconomics 18 (4): 1–35. DOI: 10.1257/mic.20240259Additional Materials
JEL Classification
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- L13 Oligopoly and Other Imperfect Markets
- L25 Firm Performance: Size, Diversification, and Scope
- L96 Telecommunications