The Social Welfare Effects of the Platform's"Exclusive Dealing":An Analysis Based on the Hotelling Model
This article investigates the motivations and basic logic behind platforms implementing"exclusive dealing",and analyzes the impact of"exclusive dealing"on social welfare and market competition landscape.During the rapid growth phase of startups,the primary goal of platforms is to expand user base rather than profit.Therefore,platforms do not actively implement"exclusive dealing".However,as the gap among platforms widens,the entire market gradually transitions to a stable and mature stage of monopolistic competition among leading platforms.Platforms in dominant positions typically use"exclusive dealing"to generate profits or exclude competitors.Specifically,in situations of relatively intense competition,although dominant platforms implementing"exclusive dealing"may lose some multi-platform merchants,they will also cause disadvantaged platforms to lose a higher proportion of multi-platform merchants,ultimately leading to an expansion in the relative merchant ratio between dominant and disadvantaged platforms,and a squeezed market survival space of disadvantaged platforms.In situations of relatively mild competition,dominant platforms may proactively reduce their number of merchants through"exclusive dealing"while increasing the fees for merchants.In this process,multi-platform merchants and some merchants exclusively living on dominant platforms may migrate to disadvantaged platforms due to cost-benefit considerations.Through the use of Hotelling model and numerical simulations,we find that:the implementation of"exclusive dealing"by dominant platforms harms the welfare of consumers,merchants,and overall social welfare,and in situations of relatively intense competition,it leads to a higher proportion of merchant loss for disadvantaged platforms and reduces their profits.However,in situations of relatively mild competition,"exclusive dealing"may also have positive effects.While enhancing the profits of dominant platforms,it may also increase the profits and number of merchants of disadvantaged platforms.According to the conclusions above,we suggest that regulatory authorities should examine the different impact of"exclusive dealing"on social welfare in different competitive environments,and accordingly improve regulatory concepts and optimize regulatory measures.
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