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Platform Price Parity Clauses and Segmentation

Joan Calzada, Ester Manna () and Andrea Mantovani ()

No 2019/387, UB Economics Working Papers from Universitat de Barcelona, Facultat d'Economia i Empresa, UB School of Economics

Abstract: We investigate how the adoption of price parity clauses (PPCs) by established platforms affects the listing decisions of suppliers. PPCs have been widely adopted by online travel agencies (OTAs) to force client hotels not to charge lower prices in alternative sales channels. We find that OTAs adopt PPCs when they are perceived as highly substitutable, and in order to prevent showrooming. PPCs allow OTAs to charge hotels higher commission fees. However, hotels can respond by delisting themselves from some OTAs. Hence, our analysis reveals that the removal of PPCs enables more hotels to resort to OTAs. This is beneficial for consumers, as prices decrease in absence of PPCs.

Keywords: Price parity clauses; Online travel agencies; Segmentation; Vertical relations. (search for similar items in EconPapers)
JEL-codes: D40 L42 L81 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2019
New Economics Papers: this item is included in nep-com and nep-pay
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