When a platform is an optional intermediary, should it require price coherence, i.e., that
sellers charge the same price to the platform’s users as they charge their direct customers?
If the platform does this, how will it affect consumers’ and overall welfare? In a model
leveraging insight from the study of third-degree price discrimination, we show that, when
demand has flexible curvature, a markup-versus-volume tradeoff arises that governs the
platform’s choice. When sellers’ profits are concave enough, the platform prefers to let them
charge separate prices. However, when it does require price coherence, there is a drawing-in
eect, geared towards low-valuation platform users, which can make this policy surprisingly
appealing for consumers.