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Platform Price Parity Clauses and Consumer Obfuscation

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  • José Ignacio Heresi

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.

Suggested Citation

  • José Ignacio Heresi, 2023. "Platform Price Parity Clauses and Consumer Obfuscation," Journal of Industrial Economics, Wiley Blackwell, vol. 71(1), pages 291-322, March.
    • Handle: RePEc:bla:jindec:v:71:y:2023:i:1:p:291-322
    DOI: 10.1111/joie.12313
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    References listed on IDEAS

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