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Regulating Platform Fees under Price Parity

Author

Listed:
  • Gomes, Renato
  • Mantovani, Andrea
Abstract
Online intermediaries greatly expand consumer information, but also raise sellers’ marginal costs by charging high commissions. To prevent disintermediation, some platforms adopted price parity and anti-steering provisions, which restrict sellers’ ability to use alternative sales channels. Whether to uphold, reform, or ban these provisions has been at the center of the policy debate, but, so far, little consensus has emerged. As an alternative, this paper studies how to cap platforms’ commissions. The utilitarian cap reflects the Pigouvian precept according to which the platform should charge net fees no greater than the informational externality it exerts on other market participants.

Suggested Citation

  • Gomes, Renato & Mantovani, Andrea, 2022. "Regulating Platform Fees under Price Parity," TSE Working Papers 22-1325, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:126835
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. David Ronayne, 2021. "Price Comparison Websites," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 1081-1110, August.
    2. Sean Ennis & Marc Ivaldi & Vicente Lagos, 2023. "Price-Parity Clauses for Hotel Room Booking: Empirical Evidence from Regulatory Change," Journal of Law and Economics, University of Chicago Press, vol. 66(2), pages 309-331.
    3. 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).
    4. Joan Calzada & Ester Manna & Andrea Mantovani, 2022. "Platform price parity clauses and market segmentation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 609-637, August.
    5. Michele Bisceglia & Jorge Padilla, 2023. "On sellers' cooperation in hybrid marketplaces," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(1), pages 207-222, January.
    6. Belleflamme, Paul & Johnen, Johannes, 2023. "Non-Price Strategies of Marketplaces: A Survey," LIDAM Discussion Papers CORE 2023015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Jeong-Yoo Kim, 2024. "Seller liability versus platform liability: optimal liability rule and law enforcement in the platform economy," European Journal of Law and Economics, Springer, vol. 58(1), pages 119-148, August.
    8. Mantovani, Andrea & Piga, Claudio A. & Reggiani, Carlo, 2021. "Online platform price parity clauses: Evidence from the EU Booking.com case," European Economic Review, Elsevier, vol. 131(C).

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    More about this item

    Keywords

    platforms; price parity; regulation; commission caps; extreme value theory;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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