Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, August 8, 2018

Platform Price Parity Clauses with Direct Sales

BjØrn Olav Johansen (Department of Economics, University of Bergen) and Thibaud Vergé (CREST; ENSAE; Université Paris-Saclay; Norwegian School of Economics) explore Platform Price Parity Clauses with Direct Sales.

ABSTRACT: We analyze the effects of price parity clauses in a setting where competing sellers distribute their products directly as well as through competing platforms. These clauses prevent a seller from offering its product at a lower price on other platforms or through its own direct sales channel. We show that when we account for the sellers? participation constraints, price parity clauses do not always lead to higher commissions and ?final prices. Instead, we fi?nd that they may simultaneously bene?fit all the actors (platforms, sellers and consumers), even in the absence of traditional efficiency arguments.

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