Price Competition Under Information (Dis)advantage
63 Pages Posted: 25 Apr 2023 Last revised: 23 May 2023
Date Written: April 16, 2023
We examine the impact of data access within a vertically integrated e-commerce platform. Using a unique daily panel, we find that both the platform owner and third-party sellers base pricing on past sales, but only the owner exploits competitors' sales data. We estimate a price competition model with heterogeneous seller learning. We find that (1) eliminating the owner's access to competitors' data increases social welfare by 0.33%, negatively impacting the owner through reduced first-party sales and (2) providing third-party sellers with equal access to competitors' data as the owner increases social welfare by 1.65%, benefiting the owner through increased referral fees and yielding a Pareto improvement.
Keywords: Price competition, e-commerce, digital platform, data access, information advantage
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