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Managing Seller Conduct in Online Marketplaces and Platform Most-Favored Nation Clauses

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  • Schlütter, Frank

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

Abstract

This article investigates the incentive and ability of a platform to limit the extent of competition between the sellers it hosts. Absent contractual restrictions, a platform has an incentive to ensure competition between the sellers. This incentive can change with the introduction of so-called platform most-favored nation clauses (PMFN) that require the online sellers not to offer better conditions on other distribution channels. Such clauses can align the interests between sellers and platforms to restrict competition. I illustrate that a platform can stabilize seller collusion to its own benefit. These results offer a novel rationale to treat PMFNs with scrutiny.

Suggested Citation

  • Schlütter, Frank, 2022. "Managing Seller Conduct in Online Marketplaces and Platform Most-Favored Nation Clauses," LIDAM Discussion Papers CORE 2022026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2022026
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    References listed on IDEAS

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    More about this item

    Keywords

    Platform MFN ; digital economics ; collusion in vertically-related markets ; agency model;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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