Results - Article of A. MANTOVANI & al.

Summary

This study examines the impact of France's removal of price parity clauses on hotel prices in Corsica, comparing them to Sardinia. Initially, prices in Corsica dropped by 2.6% following the ban, benefiting larger hotel chains more significantly than independent hotels. However, after one year, the price reductions were less pronounced overall. The findings suggest that while the ban provided some short-term relief for consumers, it wasn't sufficient to counterbalance the market power of platforms without additional regulations, such as increased transparency in hotel rankings.

Takeaways

• 😀 Price parity clauses restrict sellers from offering lower prices on other platforms, resulting in higher prices for consumers.
• 😀 The removal of price parity clauses in France in 2015 led to a short-term reduction in hotel prices on Booking.com, particularly benefiting large hotel chains.
• 😀 A comparative study between Corsica (France) and Sardinia (Italy) showed that hotel prices in Corsica dropped 2.6% more than in Sardinia after the removal of these clauses.
• 😀 While initial price reductions were noted shortly after the law's adoption, the long-term effects did not show significant differences between the two regions after one year.
• 😀 Chain hotels experienced consistent price reductions, while small independent hotels saw limited impact from the removal of price parity clauses.
• 😀 Consumers could have saved between €11 to €30 million on three-star hotels in Corsica due to the price reductions following the policy change.
• 😀 The effectiveness of removing price parity clauses was limited; structural changes are needed for small hotels to benefit similarly to chains.
• 😀 Platforms may employ 'dimming' as a retaliation strategy, reducing the visibility of hotels that charge lower prices elsewhere.
• 😀 A call for more transparency in how hotels are ranked on platforms is essential to complement the removal of price parity clauses.
• 😀 Overall, while the ban showed potential for price reductions, additional regulatory measures are necessary to enhance competition in the hospitality market.

Q & A

What are price parity clauses?

Price parity clauses are agreements that prevent sellers from offering the same product at lower prices on alternative sales channels, often leading to higher prices for consumers.

Why are price parity clauses controversial?

They are controversial because they can result in higher prices for consumers and grant more market power to platforms like booking.com.

What was the focus of the scientific article discussed in the transcript?

The article studied the impact of the removal of price parity clauses in France on hotel prices in Corsica compared to those in Sardinia.

What were the findings regarding hotel prices in Corsica after the removal of the price parity clauses?

After the removal of the clauses, hotel prices in Corsica dropped by 2.6% more than those in Sardinia in the short run.

How did the researchers measure the impact of the price parity clause removal?

They compared average hotel prices on booking.com for the same stay in Corsica and Sardinia six weeks before and after the ban was implemented.

What was the long-term impact of the price parity clause removal on hotel prices?

In the long run, the removal did not significantly lower hotel prices in Corsica compared to Sardinia, although prices for chain hotels continued to drop.

Which types of hotels benefited most from the removal of price parity clauses?

Chain hotels and highly rated hotels benefited more, showing consistent price reductions even after one year.

What is the 'dimming' strategy mentioned in the transcript?

Dimming is a retaliatory tactic used by platforms to reduce the visibility of hotels that charge lower prices elsewhere, thus penalizing them.

What implication does the study suggest regarding further regulation?

The study suggests that the removal of price parity clauses should be complemented with regulations ensuring more transparency in how hotels are ranked on platforms.

What could consumers potentially save if price parity clauses were effectively removed?

Consumers could have saved between €11 million and €30 million on three-star hotels in Corsica after the policy intervention.