Ennis, Sean, Ivaldi, Marc and Lagos, Vicente (2023) Price parity clauses for hotel room booking: empirical evidence from regulatory change. European Journal of Law and Economics, vol. 66 (n° 2).

This is the latest version of this item.

[thumbnail of tse_wp_1106.pdf]
Preview
Text
Download (582kB) | Preview
Identification Number : 10.1086/723456

Abstract

This paper examines the impact of most favored nation (MFN) clauses on retail prices, taking advantage of two natural experiments that changed vertical contracting between hotels and major digital platforms. The broad E.U. intervention narrowed the breadth of “price parity” obligations between hotels and major Online Travel Agencies (OTAs). Direct sales by hotels to customers subsequently became relatively cheaper. Comparisons with hotel pricing outside the E.U. confirm the reduction in prices for mid-level and luxury hotels. France and Germany went further and eliminated all price-parity agreements. This stronger intervention was associated solely with a significant additional price-reducing effect for mid-level hotels in Germany. Overall, wide MFNs are associated with higher retail prices. Regulating MFNs reduced prices with primary effects coming either from the narrow price-parity intervention or, perhaps, from direct sales becoming cheaper than OTAs in both E.U. and non-E.U. countries, and, interestingly, not from complete elimination of MFNs.

Item Type: Article
Language: English
Date: May 2023
Refereed: Yes
Uncontrolled Keywords: Price Parity Clause (PPC), Most favored nation (MFN), Most favored customer (MFC), Hotel Industry, Impact Evaluation, Online Travel Agency (OTA), digital platforms
JEL Classification: K21 - Antitrust Law
L14 - Transactional Relationships; Contracts and Reputation; Networks
L42 - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
L81 - Retail and Wholesale Trade; Warehousing; e-Commerce
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 13 Dec 2022 09:29
Last Modified: 30 Nov 2023 13:11
OAI Identifier: oai:tse-fr.eu:127515
URI: https://publications.ut-capitole.fr/id/eprint/46440

Available Versions of this Item

View Item

Downloads

Downloads per month over past year