Platform–merchant competition for sales services

Abstract

In this paper, we study whether a monopolistic platform prefers to impose price parity on sellers when the latter may sell directly to consumers. The platform delivers a higher quality to consumers than the direct sales channel and may generate efficiency gains for sellers. We show that the platform imposes price parity if the degree of heterogeneity between consumers is high with respect to the quality of service on the seller side. This restriction lowers the total transaction fee paid by consumers and sellers. Consumers who buy from sellers with low transaction benefits pay a lower purchase price. The average consumer and seller surplus may either increase or decrease. How to cite this article: Mariotto C, Verdier M. Platform-merchant competition for sales services.

On sellers' cooperation in hybrid marketplaces

“…In the baseline model, following the literature (e.g., Boik & Corts, 2016; Johansen & Vergé, 2017; Mariotto & Verdier, 2020), we considered per‐unit platform fees, which allowed to derive simple closed‐form solutions for the equilibrium values. However, in practice, many e‐commerce platforms charge ad‐valorem fees 19 (e.g., Johnson, 2017; Wang & Wright, 2017)—that is, $$P$$ collects $${\phi }_{i}{p}_{i}$$, with $${\phi }_{i}\in [0,1]$$, for each unit sold by $${R}_{i}$$ (at price $${p}_{i}$$) 20…”

Platform Investment and price parity clauses*

“…As a result, the literature generally finds price parity clauses result in higher fees and consumer prices, and lower consumer surplus. Some exceptions include Johansen and Vergè [2017] who show that given platform fees are constrained by the possible of firms delisting, the imposition of price parity clauses does not necessarily result in higher fees and lower consumer prices, and more recently (Mariotto and Verdier [2020] and Liu et al . [2021]) who also show possible positive effects of price parity clauses on consumers.…”

Platform price parity clauses and market segmentation

“…55Mariotto and Verdier (2020) consider a model in which sellers can sell directly to consumers or through a monopolistic platform that provides a higher quality to consumers and may generate efficiency gains for sellers. The platform adopts PPCs when the degree of heterogeneity between consumers is high with respect to the quality of service on the seller side.…”