Platform Coherence Policies with a Multiproduct Seller

I study a vertically differentiated product market intermediated by a monopoly platform. A monopoly seller offers a low- and a high-quality product to consumers with heterogenous preferences to purchase through the platform rather than directly from the seller. Absent any restrictions imposed by the platform, the seller may draw consumers to purchase directly through differences in product prices and product availability between its direct and platform selling channels. I characterize the strategic pricing and assortment decisions made by the seller. Strategic assortment can substantially lessen the platform’s ability to monetize the access it provides in buyer-seller interactions. The platform always finds it optimal to implement both cross-channel price and availability coherence policies if feasible. In contrast to general optimality of price coherence in similar markets supplied by a single-product seller, the platform may optimally allow for cross-channel price flexibility if it cannot enforce cross-channel availability coherence