About the project

About the project

Digital platforms, such as Amazon, Alibaba, and Google, have become important global players. Their practices have drawn significant anti-trust and regulatory scrutiny and critical interventions. However, existing theoretical models in the literature are mostly unsuitable for the analysis of most digital platforms, because they fail to capture the important aspects and dynamics of the digital economy.

Digital Platforms: Pricing, Variety, and Quality Provision (DIPVAR) is a five-year research project. Hosted by international business school ESMT Berlin and led by Associate Professor of Economics Özlem Bedre-Defolie, DIPVAR aims to support effective competition policy and regulation for digital markets and, thus, greatly improve consumer welfare in the European Union as well as other parts of the world. To achieve this, DIPVAR will first develop tractable and applicable models of markets with digital platforms to capture their unique features. Second, to inform antitrust and regulation policies, the project will investigate the effects of dominant platforms’ practices on prices, variety, and quality provision for buyers, small rivals, and platform entry. This analysis will highlight under which conditions we would have potentially harmful distortions in these valuable markets, which tools and types of interventions might mitigate these distortions, and when regulators should be more lenient towards business practices of digital platforms.

Areas of focus

• Economics of digital platforms
• E-commerce
• Consumer welfare
• Variety creation
• Quality provision
• Antitrust and regulatory scrutiny
• Competition policies
• Market entry

Research work packages

The project research is carried out through two working packages, on which Bedre-Defolie works with her co-authors:

Variety and quality provision by online trade platforms and multiproduct firms

Working papers:

• Online trade platforms: hosting, selling, or both? (jointly with Simon Anderson)
• Hybrid platform model (jointly with Simon Anderson)
• Variety provision of a multiproduct monopolist (jointly with Simon Anderson)
• Optimal variety and pricing of a trade platform (jointly with Simon Anderson)

Restrictions on multi-homing and switching, entry and dynamics

Working papers:

• Competition for exclusivity of a superior input (jointly with Gary Biglaiser)

Published papers:

• When do markets tip? An overview and some insights for policy (jointly with Rainer Nitsche)

Funding and duration

In 2019, DIPVAR was awarded a prestigious €1.5 million European Research Council (ERC) Starting Grant, under the European Union’s Horizon 2020 research and innovation program.

The five-year grant (2020-2025) funds several new positions for post-doctoral researchers and PhD candidates in this important area of research, while also ensuring that policymakers, academics, the media, and the public are enriched by the project’s open research results.

About the lead researcher

Özlem Bedre-Defolie is an associate professor of economics (with tenure) at ESMT Berlin since 2017 and a CEPR research fellow since December 2020. She is an associate professor II (part-time position) at the University of Bergen and Bergen Center for Competition Law and Economics (BECCLE) since August 2021. She serves as an associate editor at the RAND Journal of Economics since September 2020 and as a director at the European Association for Research in Industrial Economics since October 2020.

Bedre-Defolie's research areas are applied microeconomic theory and industrial organization. She studies economics of multi-sided platforms, multiproduct firms, and vertical contracts focusing on antitrust and regulation questions. Her research has been published in leading economics, marketing, and industrial organization journals, including American Economic Review, Journal of Economic Theory, American Economic Journal: Microeconomics, Marketing Science, and International Journal of Industrial Organization.

Bedre-Defolie joined ESMT Berlin in January 2010 as an assistant professor. She received her PhD in economics (with highest distinction) from Toulouse School of Economics (TSE) in France and also holds MSc in economic theory and econometrics from TSE. Before moving to Toulouse, Bedre-Defolie obtained a BA in economics and BSc in mathematics from Boğaziçi University in Istanbul, Turkey.

Before joining ESMT, she spent a year in Paris as a postdoctoral research fellow at Ecole Polytechnique. During the first two years of her appointment at ESMT, she worked as a part-time visiting scholar in the research department of the financial stability wing of Norges Bank, the central bank of Norway. She was an associate professor II (part-time position) at University of Bergen and Bergen Center for Competition Law and Economics (BECCLE) from January 2018 to January 2021.

See Bedre-Defolie's biography and publications.