Template-Type: ReDIF-Paper 1.0
Title: Product Recommendations and Price Parity Clauses
Author-Name: Martin Peitz
Author-Email: Martin.Peitz@gmail.com
Author-Name: Anton Sobolev
Author-Email: anton.sobolev@uni-mannheim.de

Classification-JEL: L12, L15, D21, D42, M37
Keywords: intermediation, digital platforms, price parity, recommender system, MFN
clause, e-commerce

Abstract: A seller can offer an experience good directly to consumers and indirectly through
an intermediary. When selling indirectly, the intermediary provides recommendations
based on the consumer’s match value and the prices at which the product is sold. The
intermediary faces the trade-off between extracting rents from consumers who strongly
care about the match value versus providing less informative recommendations but
also serving consumers who do not. We analyze the allocative and welfare effects
of prohibiting price parity clauses and/or regulating the intermediary’s recommender
system. Prohibiting price parity clauses is always welfare decreasing in our model.

Note: 
Length: 64
Creation-Date: 2024-09
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp595
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2024_595