Competition Policy Instruments in a Digitized Economy

The paper presents a theoretical analysis of the consequences of the price parity prohibition in the digital hotel booking market. The paper includes an analysis of the strategies of market participants; and determining the consequences of the competition authorities interference in market operations. Using the methods of the game-theoretic approach and microeconomic modeling, it is shown that due to the prohibition of price parity, a digital platform that occupies a monopoly position in the market can potentially put pressure on hotels in order to create favorable conditions, and also to have the protection from the hotels (who acts as free riders). The results show that antitrust authorities do not need to interfere in the relationship between the digital platform and hotels, since this action cannot lead to the expected results, but it can also have negative consequences. The results can be useful for evaluating antitrust policy instruments used to regulate agency relations in digital markets.