The Competitive Effects of Parity Clauses on Online Commerce

36 Pages Posted: 13 Oct 2015

See all articles by Ariel Ezrachi

Ariel Ezrachi

University of Oxford - Faculty of Law

Date Written: October 11, 2015

Abstract

Parity clauses, also known as most-favoured-nation clauses, are designed to address the hold-up problem in vertical relations and facilitate investment and efficiencies by the downstream platform. However, when designed too broadly, they have the potential of undermining the dynamics of competition and reducing consumer welfare. This paper explores the welfare effects of parity clauses and reflects on the level of intervention they may call for. It reviews the possible theories of harm associated with parity clauses and draws a dividing line between the effects generated by narrow and wide parity.

Keywords: Parity clause, Most Favoured Nation clause, Price Comparison websites

JEL Classification: K21, L11, L16, L41, L42

Suggested Citation

Ezrachi, Ariel, The Competitive Effects of Parity Clauses on Online Commerce (October 11, 2015). Oxford Legal Studies Research Paper No. 55/2015, Available at SSRN: https://ssrn.com/abstract=2672541 or http://dx.doi.org/10.2139/ssrn.2672541

Ariel Ezrachi (Contact Author)

University of Oxford - Faculty of Law ( email )

Oxford
United Kingdom

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