Platform Information Sharing and Hub-and-Spoke Collusion—From the Perspective of Price Discrimination
We investigate a product differentiation competition with a monopolistic platform upstream and duopolistic retailers downstream.The platform can choose whether to share the consumer preference information with the retailers.We find that at equilibrium the platform chooses the information sharing only when the downstream firms collude.Therefore,a hub-and-spoke collusion can be reached through strategic wholesale pricing and information sharing by the platform.The collusion generates heterogenous welfare effects for consumers with different preferences but generally harms consumer surplus and social welfare.
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