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2022 Documento de Trabajo #350

Platform Price Parity Clauses and Consumer Obfuscation

Several antitrust authorities have investigated platform price parity clauses around the world. I analyze the impact of these clauses when platforms design a search environment for sellers and buyers to interact. In a model where platforms choose the unitary search cost faced by consumers, I show when it is profitable for platforms to obfuscate consumers through high search costs.

Then, I show that price parity clauses, when exogenously given, can increase or reduce obfuscation, prices, and consumer surplus. Finally, when price parity clauses are endogenous, they are only observed in equilibrium if they hurt consumers.

JEL Classifications: D83, L42, L81.

José Ignacio Heresi

Keywords: consumer search, obfuscation, platforms, price parity clauses.