522 COMPETITION LAW IN TOURISM investment and show that all the benefits generated by increased investment can again be extracted through commissions and thus do not necessarily benefit to final consumers. Investment may also be excessive (leading to too high prices on the final market) when price parity is in place, a point also made by Edelman & Wright (2015). 5. PRICE COMPARISON WEBSITES (PCWS) Johansen and Vergé (2017) expanded on the earlier models, allowing suppliers to compete with the platforms to attract final consumers (i.e. direct sales) and to select whether to be active on platforms or not. Pure vertical relationship models do not account for some important features of online intermediation platforms, for instance, these platforms help consumers to find the best product and offer additional services or benefits, on which suppliers could attempt to free-ride by letting consumers search on the platforms and then attempting to divert them to their direct distribution channels. Usually, suppliers are concerned with enlarging their profits by optimising price and output; intermediaries are concerned primarily with relative prices (i.e. the price level paid by one intermediary vis-à-vis the prices paid by its competitors, and the price levels for downstream products charged by one intermediary vis-à-vis the prices charged by its competitors and prices of other substitutes). PCWs may be used to learn about the product or its characteristics, if ensuring that adequate protection is absent. Customers may use the PWCs and yet subsequently complete the transaction directly on the supplier’s website or through other channels. The rationale behind such restriction lies in the vertical relationship between the PCW and the supplier. The hold-up problem, often manifested in vertical relationships, can be resolved by eliminating the risk of the supplier (or other sellers) freeriding on the PCWs’ investment in promoting the supplier’s products and services. Parity clauses are often introduced into the vertical relationship in order to minimise externalities and facilitate investment. Consider, for instance, a narrow MFN in which the supplier agrees not to offer the goods on its own website at a lower price or on better terms. This protection incentivises the PCW to invest in demand enhancing features, creating an accessible platform through which search costs are minimised and consumers can compare price and other non- -price indicators (such as customer ratings, service and quality). This externality
RkJQdWJsaXNoZXIy MTE4NzM5Nw==