Antitrust & Competition Policy Blog

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

Thursday, January 14, 2021

Platform Price Parity Clauses and Segmentation

Platform Price Parity Clauses and Segmentation

By:

Joan Calzada (Universitat de Barcelona); Ester Manna (Universitat de Barcelona); Andrea Mantovani (University of Bologna)

Abstract:

We investigate how the adoption of price parity clauses (PPCs) by established platforms affects the listing decisions of suppliers. PPCs have been widely adopted by online travel agencies (OTAs) to force client hotels not to charge lower prices in alternative sales channels. We find that OTAs adopt PPCs when they are perceived as highly substitutable, and in order to prevent showrooming. PPCs allow OTAs to charge hotels higher commission fees. However, hotels can respond by delisting themselves from some OTAs. Hence, our analysis reveals that the removal of PPCs enables more hotels to resort to OTAs. This is beneficial for consumers, as prices decrease in absence of PPCs.

URL:

http://d.repec.org/n?u=RePEc:ewp:wpaper:387web&r=com

https://lawprofessors.typepad.com/antitrustprof_blog/2021/01/platform-price-parity-clauses-and-segmentation.html

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