Managing Seller Conduct in Online Marketplaces and Platform Most-Favored Nation Clauses

Frank Schlütter
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Frank Schlütter: Université catholique de Louvain, LIDAM/CORE, Belgium

No 2022026, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This article investigates the incentive and ability of a platform to limit the extent of competition between the sellers it hosts. Absent contractual restrictions, a platform has an incentive to ensure competition between the sellers. This incentive can change with the introduction of so-called platform most-favored nation clauses (PMFN) that require the online sellers not to offer better conditions on other distribution channels. Such clauses can align the interests between sellers and platforms to restrict competition. I illustrate that a platform can stabilize seller collusion to its own benefit. These results offer a novel rationale to treat PMFNs with scrutiny.

Keywords: Platform MFN; digital economics; collusion in vertically-related markets; agency model (search for similar items in EconPapers)
JEL-codes: L13 L40 L50 (search for similar items in EconPapers)
Pages: 55
Date: 2022-11-29
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic, nep-pay and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2022026

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