Affiliation:
1. Department of Economics Universidad Alberto Hurtado Santiago Chile
2. Department of Industrial Engineering Universidad de Chile Santiago Chile
Abstract
Several antitrust authorities have investigated platform price parity clauses around the world. I analyze the impact of these clauses when platforms design a search environment for sellers and buyers to interact. In a model where platforms choose the unit search cost faced by consumers, I show when platforms can profitably obfuscate consumers through high search costs. Then, I show that price parity clauses, when exogenously given, can increase or reduce obfuscation, prices, and consumer surplus. Finally, when price parity clauses are endogenous, they are only observed in equilibrium if they hurt consumers.
Subject
Economics and Econometrics,General Business, Management and Accounting,Accounting