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TILEC Work in Progress: Serena Nuzzi

MFN Clauses and Quality Disclosure on Online Platforms
10:45-11:45, T 50A

In this paper I investigate the effects of MFN clauses imposed by a booking platform on the quality of a hotel. I consider two possible scenarios, depending on whether an MFN clause is allowed or forbidden. I show that, when allowed, a platform will always adopt an MFN clause to prevent hotel's free riding behaviors and make positive profits. My paper points out two key findings. Firstly, with MFN clause in place, the hotel chooses the maximum quality when it sells through the platform, whereas it chooses the minimum quality when it sells only through its own channel. Secondly, a platform prefers to set a percentage fee rather than a non-percentage fee.

When: 20 September 2017 10:45

End date: 20 September 2017 11:45

Where: Tias building