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Intermediated vs. Direct Sales and a No-Discrimination Rule

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  • Wismer, Sebastian

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 a NDR. 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.

Suggested Citation

  • Wismer, Sebastian, 2013. "Intermediated vs. Direct Sales and a No-Discrimination Rule," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79999, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc13:79999
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    Cited by:

    1. BjØrn Olav Johansen & Thibaud Vergé, 2017. "Platform Price Parity Clauses with Direct Sales," Working Papers 2017-45, Center for Research in Economics and Statistics.
    2. Hongyan Li & Shiming Deng, 2019. "A game-theoretical analysis of joint-rebate strategies in platform-based retailing systems," EURO Journal on Decision Processes, Springer;EURO - The Association of European Operational Research Societies, vol. 7(1), pages 117-150, May.
    3. Wang Cong & Yang Huifang & Yang Deli, 2019. "The Influence of Third-party E-Commerce Platform Price Limits on the Dual-Channel Strategy of Manufacturers," Journal of Systems Science and Information, De Gruyter, vol. 7(2), pages 173-186, April.

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    More about this item

    JEL classification:

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

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