Fee Discrimination by Hybrid Platforms

Fee discrimination is commonly used by marketplace platforms (e.g., Amazon, eBay, and Uber). To better understand how marketplace fee discrimination interacts with the hybrid platform business model, we model a marketplace platform that manages fees and categories across a continuum of retail markets that it may choose to enter. We find that the hybrid model generates lower fees, greater retail competition, and less market foreclosure relative to a ban on platform retail entry. We also consider a variety of extensions relating to policy including vertical integration, banning fee discrimination, margin squeeze policies, and a variety of tax policies intended on leveling the competitive playing field between the platform and its merchants