Julian Wright (National University of Singapore)

"Steering by information intermediaries"

4 June 2018, 12:45 pm

Abstract

We provide a model of an intermediary that can steer consumers towards particular firms due to its information advantage. Unlike most existing models of steering, our model allows firms to compete for consumers through commissions and prices. We explore the implications of steering for market outcomes, showing how steering reverses the normal relationship between competition and price, and that steering can lead consumers to be better off without the intermediary. We also consider the relationship between steering and the price parity clauses used by online platforms.