【Topic】
Prominence in Online Platforms
【Host】
Prof. GAO Yuetao, assistant professor of Department of Marketing, School of Management, Xiamen University
【Abstract】
Consumers increasingly rely on online platforms to search for product information, with a specific platform gaining prominence in their consideration sets. This research investigates the impact of platform prominence on sellers’ price competition and consumer welfare. An important feature of our analysis is that consumers optimally decide whether to single-home or multi-home across platforms, as well as the number of sampled sellers within a platform. Prominence implies that the prominent platform attracts a larger number of single-homing consumers compared to the non-prominent platform. First, we find prices can decrease with search costs and prices on the prominent platform can be either lower or higher than those on the non-prominent platform. Second, the curse of platform prominence can arise: sellers on the prominent platform may have lower profits than those on the non-prominent platform, even lower than in the scenario without prominence. We also uncover the blessing of platform prominence: all sellers can have higher profits than in the scenario without prominence. Third, consumers can have higher surplus as a result of platform prominence.
【Speaker】
ZHU Yi
Professor of University of Minnesota, Carlson School of Management
