Price Discrimination against Multi-Clouders

Jihwan Do and Jeanine Miklos-Thal
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Jihwan Do: Yonsei University
Jeanine Miklos-Thal: University of Rochester

No 2025rwp-250, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: The cloud services industry, which is currently dominated by a few large providers, has come under scrutiny from antitrust authorities worldwide. One concern is that "egress fees"—charges for transferring data out of a provider's cloud-could harm competition and welfare by discouraging multi-clouding, whereby a user combines services from several providers. Motivated by this policy concern, we analyze the effects of banning price discrimination against multi-stop shoppers in a market where multi-product firms sell complementary goods to buyers with elastic demands, and multi-stop shoppers impose higher service costs than one-stop shoppers. We find that if buyers are locked into a specific product combination, then a ban on price discrimination against multi-stop shoppers raises social welfare for a wide range of demand functions. If product choices are endogenous and buyers' product preferences are weak, however, then a ban on price discrimination tends to harm social welfare.

Pages: 60pages
Date: 2025-05
New Economics Papers: this item is included in nep-com and nep-mic
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