Dual Role Platforms and Search Order Distortion

We investigate the impact of search order distortion, the act of steering consumers to search for a particular product first, by a vertically integrated platform that intermediates the products of a third-party seller as well as its own product. We show that the effects of search order distortion on prices and welfare depend on the search costs and commission rates. Even though a vertical separation policy could improve welfare through lower prices, a policy that only prohibits search order distortion could harm welfare and consumer surplus when commission rates are high. This result sheds lights on a potential risk of the policy that requires dominant platforms to be neutral while allowing them to sell on the marketplaces.