Fabrizio Ciotti
CORE/LIDAM, UCLouvain
will give a presentation on
Competition for Prominence
Abstract:
Intermediaries linking retailers to buyers may influence consumers' purchasing decisions by assigning a prominent position to one retailer. In this paper, we study the business strategy employed by intermediaries (in particular, online marketplaces) of grouping all the offers for a specific product available in the market under a single listing, and selecting a default retailer for it. As a share of consumers only consider the prominent offer, obtaining the default position translates into exclusive access to some consumers. We show that such a market design can lead retailers to fiercely (endogenously) compete for prominence, significantly benefiting the intermediary by drastically mitigating the double marginalization problem otherwise present.
joint with Leonoardo Madio