Intermediated vs. Direct Sales and a No-Discrimination Rule

BGPE Discussion Paper No. 131

38 Pages Posted: 6 Feb 2013 Last revised: 14 Feb 2013

See all articles by Sebastian Wismer

Sebastian Wismer

University of Würzburg - Institute of Economics and Social Sciences

Date Written: January 30, 2013

Abstract

When sellers join a platform to sell their products, the platform operator may restrict their strategic decisions. In fact, several platform operators impose most-favored treatment or no-discrimination rules (NDRs), asking sellers not to offer better sales conditions elsewhere.

In this paper, I analyze a model that allows for an endogenous split-up of consumers between sales channels. Competing sellers might set different prices across channels, depending on the platform tariff and presence of a NDR. I find that the platform operator imposes a NDR if he faces high transaction costs, if seller competition is weak, and if the initial distribution of consumers on channels is strongly skewed. Prohibiting NDRs can have both positive and negative effects on welfare.

Keywords: intermediation, platform pricing, no-discrimination rule

JEL Classification: D40, L42, L81

Suggested Citation

Wismer, Sebastian, Intermediated vs. Direct Sales and a No-Discrimination Rule (January 30, 2013). BGPE Discussion Paper No. 131. Available at SSRN: https://ssrn.com/abstract=2212605 or http://dx.doi.org/10.2139/ssrn.2212605

Sebastian Wismer (Contact Author)

University of Würzburg - Institute of Economics and Social Sciences ( email )

Sanderring 2
Wuerzburg, D-97070
Germany

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