Price Competition Under Information (Dis)advantage

Abstract

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