Selling cross-border in online markets: The impact of the ban on geoblocking strategies

•Two multi-channel retailers located in different countries can block access to their online store from foreign consumers.•Geoblocking allows retailers to soften competition, but at the cost of lower demand.•A ban on geoblocking leads to lower prices, offline and online.•When retailers invest in enhancing online demand, the ban may adversely affect investment and welfare.•We extend the model to account for price discrimination and study the role of shipping costs. We develop a model of strategic geoblocking, where two competing multi-channel retailers, located in different countries, can decide to block access to their online store from foreign consumers. We characterize the equilibrium when firms decide unilaterally whether to introduce geoblocking restrictions. We show that geoblocking allows firms to soften competition, but at the cost of lower demand. A ban on geoblocking leads to lower prices, both offline and online. However, when firms can invest in increasing online demand, the ban may have adverse effects on investment and social welfare. We extend our analysis to account for price discrimination and investigate the role of shipping costs.