Abstract
Price parity clauses (PPCs) are widely adopted by online platforms to force client sellers not to lower their prices elsewhere. We investigate under what conditions online travel agencies (OTAs) decide to apply PPCs, and how this affects hotels' listing decisions on OTAs. We find OTAs adopt PPCs when there is a sufficiently large competitive pressure in the market, either between OTAs, or between hotels (or both). PPCs allow OTAs to charge higher com-mission fees to hotels, which can respond by delisting from certain OTAs, thereby segmenting the market. We also find that consumers and hotels generally lose out with PPCs.
Reference
Joan Calzada, Ester Manna, and Andrea Mantovani, “Platform price parity clauses and market segmentation”, Journal of Economics and Management Strategy, vol. 31, n. 3, 2022, pp. 609–637.
Published in
Journal of Economics and Management Strategy, vol. 31, n. 3, 2022, pp. 609–637