Search platforms: showrooming and price parity clauses

the Rand Journal of Economics (2020)

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Chengsi Wang

and

Julian Wright

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발표자 : 박희준

Introduction

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• Third-party marketplaces
• Firms set prices on the platforms.
• Consumers search for firms and complete their purchases through the platforms.
• When consumers complete a purchase through a platform, firms pay a commission fee to the platform

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• Modelling these markets stems from recent policy investigations into the use of price parity clauses (PPCs) by platforms.
• Wide-PPC : price a firm sets on the platform be no higher than the price the same firm charges for the same good through any other channel(rival platform and direct channel).
• Narrow-PPC : the price a firm sets on the platform be no higher than the price the firm sets when it sells directly.

Introduction

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1. Why do platforms enforce PPCs on firms?
1. To address showrooming: Platforms generate no revenue when showrooming occurs.

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2. What’s difference between RPM(resale price maintenance) and PPC?
1. In RPM, the manufacturer enforces retailers not to set their product prices below a certain level(across agents).
2. In PPC, prices cannot be set below the platform's price elsewhere. Therefore, unlike RPM, it establishes a rule between the platform itself and the agents. It’s familiar with full-service retailer(anti competitive).

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3. What’s problem?
1. Platforms with PPC can increase its market power by raising fees.

Introduction

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• Example 1 : Amazon’s General Pricing Rule
• The item price and total price of an item a seller lists on Amazon.com be at or below the item price and total price at which the seller offers the item via any other online sales channel.
• In 2012, German and United Kingdom (UK). Authorities investigated Amazon’s rule, and Amazon responded by removing the rule.

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• Example 2 : Booking.com and Expedia

- In 2015, several European authorities made commitments to remove wide-PPCs in Europe

but retained their narrow-PPCs. However, the Austrian, Belgian, French, and Italian parliaments have each passed laws making both types of PPCs illegal.

Introduction

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• Example 3 : 공정거래위원회 (온라인 플랫폼 독과점 심사지침의 제정·시행)

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최혜국 대우 요구 (심사지침 III. 3. 나.)

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• 온라인 플랫폼 사업자가 온라인 플랫폼 이용사업자에게 자사 온라인 플랫폼 상에서 거래하는 상품 또는 서비스의 가격 등 거래조건을 다른 유통경로에서 거래하는 가격 등 대비 동등하거나 더 유리하게 적용하도록 하는 것을 지칭한다. 심사지침은 최혜국 대우 요구가 온라인 플랫폼 간 자유로운 가격경쟁을 제한하고 새로운 플랫폼의 시장 진입을 방해하여 경쟁제한 우려가 있다고 판단한다.

Model

• Timing and equilibrium selection
• The platform decides whether to operate, and sets the f. Firms and consumers observe f.
• Firms decide whether to join M and set their price(s).
• Without observing firms’ decisions, consumers decide whether to search.

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• symmetric perfect Bayesian equilibrium

All firms make the same joining decisions and set the same prices. Platform always prefers the equilibrium that all firms join M to the equilibrium that none of firms join M.

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Analysis with a monopoly platform; showrooming & PPC

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Case 1

Case 2

Platform competition with showrooming & wide-PPC

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• Wide-PPC removes the constraint on platforms’ fee from platform competition and from showrooming.

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• Therefore just same result of the monopoly case.

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• Wide-PPCs lead to higher fees, higher prices (on all channels), and lower consumer surplus than under narrow-PPCs.

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Policy implication

• Main anticompetitive effect 1) Either type of PPC shuts down the ability of firms to undercut the platform in attracting consumers to complete purchases if the fee the platform charges is too high.

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• Main anticompetitive effect 2) Under wide-PPC, the equilibrium fees replicate the monopoly outcome under a PPC. It suppresses and distorts platform competition.

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• Since a narrow-PPC is seen as a comparatively less restrictive alternative than a wide-PPC, regulatory authorities in various countries permit narrow-PPCs in order to deter the use of wide-PPCs.

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• If platforms are viable under showrooming, then banning narrow-PPC as well also increases consumer surplus, because it ensures the showrooming constraint lowers platform fees.
• Monopoly platform uses registration fee not to induce showrooming without using PPCs.

쿠팡이츠의 경우 와우 매장에 등록되려면 PPC 강제를 요구하는 중�https://news.kbs.co.kr/news/pc/view/view.do?ncd=8099816