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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 unitary search cost faced by consumers, I show when it is profitable for platforms to 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. JEL Classifications: D83, L42, L81. Key words: consumer search,obfuscation,platforms,price parity clauses.

Suggested Citation

  • José Ignacio Heresi, 2022. "Platform Price Parity Clauses and Consumer Obfuscation," Documentos de Trabajo 350, Centro de Economía Aplicada, Universidad de Chile.
    • Handle: RePEc:edj:ceauch:350
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    More about this item

    Keywords

    consumer search; obfuscation; platforms; price parity clauses.;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • 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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