N°26-62: Asymmetric Price Competition on Hybrid Platforms: Theory and Evidence from Amazon

We study how hybrid platform operation, in which a platform competes with third-party sellers while charging a commission on their sales, shapes pricing incentives. Our model identifies two channels induced by the ad valorem commission - revenue sharing and double markup - that generate asymmetric pricing behavior between the platform and third-party sellers. Using data from Amazon's U.S. marketplace, we find patterns consistent with the model's predictions: third-party prices respond modestly more strongly to third-party entry and exit than to Amazon entry and exit, and significantly more strongly than Amazon prices do to common commodity cost shocks.