Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 08/15: Resale price maintenance in two-sided markets

Tommy S. Gabrielsen (), Bjørn Olav Johansen () and Teis L. Lømo ()
Additional contact information
Tommy S. Gabrielsen: Department of Economics, University of Bergen, Postal: Post Box 7800, 5020 Bergen
Bjørn Olav Johansen: Department of Economics, University of Bergen, Postal: Post Box 7800, 5020 Bergen
Teis L. Lømo: Department of Economics, University of Bergen, Postal: Post Box 7800, 5020 Bergen

Abstract: In many two-sided markets, platforms use intermediary agents to reach consumers at one side of the market. In addition to the usual externalities in two-sided markets, the use of agents creates an additional externality for the platforms. We study if and how competing platforms can internalize the externalities by imposing resale price maintenance (RPM) on the agents. By the appropriate use of RPM, the platforms can induce the fully integrated outcome. Using a speci…c example, we show that consumers’surplus is reduced when the equilibrium involves the use of minimum RPM, and consumers benefi…t when maximum RPM is used.

Keywords: Two-sided markets; resale price maintenance

JEL-codes: L13; L41; L42

34 pages, November 25, 2015

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