Platform Price Parity Clauses and Consumer Obfuscation

José Ignacio Heresi

No 350, Documentos de Trabajo from Centro de Economía Aplicada, Universidad de 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 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.

Date: 2022
New Economics Papers: this item is included in nep-com, nep-mic, nep-pay and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:edj:ceauch:350

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