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Platform Price Parity Clauses and Segmentation

Author

Listed:
  • 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.

Suggested Citation

  • Joan Calzada & Ester Manna & Andrea Mantovani, 2019. "Platform Price Parity Clauses and Segmentation," UB School of Economics Working Papers 2019/387, University of Barcelona School of Economics.
    • Handle: RePEc:ewp:wpaper:387web
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    File URL: http://hdl.handle.net/2445/127887
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    Citations

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    Cited by:

    1. Michele Bisceglia & Jorge Padilla & Salvatore Piccolo, 2019. "When Prohibiting Platform Parity Agreements Harms Consumers," CSEF Working Papers 542, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    2. Bisceglia, Michele & Padilla, Jorge & Piccolo, Salvatore, 2021. "When prohibiting wholesale price-parity agreements may harm consumers," International Journal of Industrial Organization, Elsevier, vol. 76(C).
    3. Gomes, Renato & Mantovani, Andrea, 2020. "Regulating Platform Fees under Price Parity," CEPR Discussion Papers 15048, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Price parity clauses; Online travel agencies; Segmentation; Vertical relations.;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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