Platform competition with free entry of sellers

We study platforms setting access prices and commissions on revenues of sellers engaged in monopolistic competition with free entry, such as the app providers on the app stores of Apple and Android devices. The link between prices on different sides induces the platforms to redistribute all the commission revenues through lower access prices and to set the optimal commission rates from the point of view of consumers, taking into account the pass-through on the prices of sellers, the elasticities of demand and surplus for their services and the elasticity of entry with respect to profitability. We discuss the role of heterogeneous sellers, substitutability between sellers’s products and limitations of the basic alignment of interest due to direct channels for sellers and consumer myopia.