Platform-Merchant Competition for Selling Services

46 Pages Posted: 2 Oct 2015 Last revised: 17 Dec 2018

See all articles by Carlotta Mariotto

Carlotta Mariotto

European Commission DG COMP - Chief Economist Team

Marianne Verdier

Université Paris 2 Panthéon Assas

Date Written: December 10, 2018

Abstract

In this paper, we study whether a monopolistic platform prefers to impose price parity when it competes with merchants for selling services. The platform and the direct sales channel are differentiated in quality on the consumer side and in terms of efficiency. We show that the platform imposes price parity when it is highly differentiated in quality on the consumer side and that this restriction lowers the total transaction fee paid by consumers and merchants. Price parity increases the total buying price of consumers who buy from merchants who receive high benefits of selling on
the platform and decreases it otherwise.

Keywords: Two-Sided Markets, Selling Channel, Price Parity, Direct Sales

JEL Classification: E42; L1; O33

Suggested Citation

Mariotto, Carlotta and Verdier, Marianne, Platform-Merchant Competition for Selling Services (December 10, 2018). Available at SSRN: https://ssrn.com/abstract=2667552 or http://dx.doi.org/10.2139/ssrn.2667552

Carlotta Mariotto

European Commission DG COMP - Chief Economist Team ( email )

1210 Sint-Joost-ten-Noode
Bruxelles, 1000
Belgium
0032493961759 (Phone)

Marianne Verdier (Contact Author)

Université Paris 2 Panthéon Assas ( email )

France

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