Resale Price Maintenance in Two‐Sided Markets

40 Pages Posted: 22 Mar 2019

See all articles by Tommy Staahl Gabrielsen

Tommy Staahl Gabrielsen

University of Bergen - Department of Economics

Bjørn Olav Johansen

University of Bergen - Department of Economics

Teis Lunde Lømo

University of Bergen - Department of Economics

Date Written: September 2018

Abstract

We consider competing two‐sided platforms selling directly to one side of the market, and through an agent to the other side. Platforms offer nonlinear tariffs, and can choose whether to contract with the same or different agents. We study the platforms’ incentives to impose resale price maintenance (RPM), and the effect on end customers. We find that, even if customers on both sides value each other's participation, platforms impose minimum RPM to raise prices on both sides simultaneously if platform competition is sufficiently strong. In a linear demand example, we find that overall welfare decreases with minimum prices and increases with maximum prices.

Suggested Citation

Gabrielsen, Tommy Staahl and Johansen, Bjørn Olav and Lømo, Teis Lunde, Resale Price Maintenance in Two‐Sided Markets (September 2018). The Journal of Industrial Economics, Vol. 66, Issue 3, pp. 570-609, 2018, Available at SSRN: https://ssrn.com/abstract=3358540 or http://dx.doi.org/10.1111/joie.12182

Tommy Staahl Gabrielsen (Contact Author)

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

Bjørn Olav Johansen

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

Teis Lunde Lømo

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

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