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Intermediated vs. Direct Sales and a No-Discrimination Rule

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  • Sebastian Wismer

Abstract

When sellers join a platform to sell their products, the platform operator may restrict their strategic decisions. In fact, several platform operators impose most-favored treatment or no-discrimination rules (NDRs), asking sellers not to offer better sales conditions elsewhere. In this paper, I analyze a model that allows for an endogenous split-up of consumers between sales channels. Competing sellers might set different prices across channels, depending on the platform tariff and presence of aNDR. I find that the platform operator imposes a NDR if he faces high transaction costs, if seller competition is weak, and if the initial distribution of consumers on channels is strongly skewed. Prohibiting NDRs can have both positive and negative effects on welfare.

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File URL: http://www.bgpe.de/texte/DP/131_Wismer.pdf
File Function: First version, 2013
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Bibliographic Info

Paper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number 131.

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Length: 39 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:bav:wpaper:131_wismer

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Web page: http://www.bgpe.de/
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Keywords: Intermediation; Platform pricing; No-discrimination rule;

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