We study a hybrid marketplace such as Amazon selling its own products and set-
ting a commission rate on revenues of sellers engaged in monopolistic competition
with free entry. For a large class of microfoundations based on a representative agent,
the introduction of products by the marketplace is neutral on consumer welfare for
a given commission, but exerts an ambiguous impact through its changes: a de-
mand substitution mechanism pushes for a higher commission, but an extensive
margin mechanism pushes for a lower commission aimed at attracting new sellers
and more purchases on the marketplace. With constant demand elasticities, a hybrid
marketplace sets lower (higher) commissions and increases (decreases) consumer wel-
fare compared to a pure marketplace if its products face a less (more) elastic demand.
We extend the analysis to alternative timing, Bertrand competition between sellers,
endogenous product selection by the marketplace, specic commissions and advertising
for product discovery.