First-party content and market concentration on a B2B E-commerce platform – Theory and empirical evidence

Abstract

In this study, we develop analytical models based on the Cournot competition model to analyze the influence of substitutive first-party content (SFPC) on platform-based market concentration at different complementary first-party content (CFPC) levels. We further use a unique dataset collected from an online B2B E-commence platform to validate our findings. We discover that at a low CFPC level, increased SFPC leads to fewer seller-posted products on the platform and crowds out third-party sellers, making the platform a more concentrated market. When the CFPC level is high, third-party sellers' responses to increased SFPC turn the opposite: they fight back by posting more products on the platform. Consequently, the market becomes less concentrated and more competitive. To our knowledge, this study is among the first to explore the strategic use of SFPC and its influence on market concentration at different CFPC levels in the context of B2B E-commerce platforms.