This paper provides a framework for analyzing the impact of a big platform's data acquisition and self-preferencing on niche firms' entry decisions with a simple two-period model. If a platform can acquire data and production cost is sufficiently low, the platform's ability to gain advantages over niche firms, which makes the platform a monopolist, influences niche firms' entry decision in several ways that depend on the size of demand given to the niche firms. Specifically, in the case of a niche firm having a small demand size, the related abilities of the platform facilitate the entry of niche firms, which is often impossible without data acquisition and self-preferencing exposures enabled by the platform. On the other hand, those abilities of the platform are a threat to the niche firms with intermediate-size demand, and thus negatively influence their entry decision. In terms of welfare, we find that those abilities of the platform can improve the consumer's surplus and total welfare by reducing the platform's common optimal referral rate for niche products, although they can harm the net profit of niche firms.
JEL classification: D82, L12, L41