< Go back to the Publications

Vertical Restraints for On-line Sales

October 2013

OECD Policy Roundtables

"The development of the internet and e-commerce is having a profound impact on firms’ business models, consumers’ behaviour and the overall economy. That should improve competition among suppliers and yield higher consumer and social welfare. Yet, digital ecosystems present some competitive risks. This greater availability of information may allow firms to monitor each other more easily, thereby facilitating collusive conduct; also, strong network externalities may tip markets toward creating dominant players; consumers may be deceived more readily by misleading and non-verifiable information. Moreover, manufacturers and distributors have strived over the years to create distribution systems that offer consumers pre-sale and post-sale services that enhance the consumers’ evaluation of goods and services, increase their welfare and make all market players better off. 

The diffusion of on-line sales, however, may disrupt or jeopardise this system and harm firms and consumers alike in the medium/long-run. Arguably for that reason, manufacturers might limit their online distributors’ ability to compete on price. Whether such limitations are generally pro- or anti-competitive was a hotly contested issue at the roundtable, but a consensus did emerge that the framework for analysing that question should be the same in both the on-line and off-line contexts."

Disclaimer: this external document does not necessarily represent the views of Microeconomix.

Download the document