IDEAS home Printed from https://ideas.repec.org/a/eee/indorg/v72y2020ics0167718720300825.html
   My bibliography  Save this article

Seller curation in platforms

Author

Listed:
  • Casner, Ben

Abstract

This article explores why market platforms do not expel low-quality sellers when screening costs are minimal. I model a platform market with consumer search. The presence of low-quality sellers reduces search intensity, softening competition between sellers and increasing the equilibrium market price. The platform admits some low-quality sellers if competition between sellers is intense. Recommending a high-quality seller and this form of search obfuscation are complementary strategies. The low-quality sellers enable the recommended seller to attract many consumers at a high price and the effect of the recommendation is strengthened as low-quality sellers become more adept at imitating high-quality sellers.

Suggested Citation

  • Casner, Ben, 2020. "Seller curation in platforms," International Journal of Industrial Organization, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:indorg:v:72:y:2020:i:c:s0167718720300825
    DOI: 10.1016/j.ijindorg.2020.102659
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167718720300825
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijindorg.2020.102659?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Susan Athey & Glenn Ellison, 2011. "Position Auctions with Consumer Search," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(3), pages 1213-1270.
    2. Michael Dinerstein & Liran Einav & Jonathan Levin & Neel Sundaresan, 2018. "Consumer Price Search and Platform Design in Internet Commerce," American Economic Review, American Economic Association, vol. 108(7), pages 1820-1859, July.
    3. Mark Bagnoli & Ted Bergstrom, 2006. "Log-concave probability and its applications," Studies in Economic Theory, in: Charalambos D. Aliprantis & Rosa L. Matzkin & Daniel L. McFadden & James C. Moore & Nicholas C. Yann (ed.), Rationality and Equilibrium, pages 217-241, Springer.
    4. Aleksei Smirnov & Egor Starkov, 2022. "Bad News Turned Good: Reversal under Censorship," American Economic Journal: Microeconomics, American Economic Association, vol. 14(2), pages 506-560, May.
    5. Toomas Hinnosaar & Keiichi Kawai, 2020. "Robust pricing with refunds," RAND Journal of Economics, RAND Corporation, vol. 51(4), pages 1014-1036, December.
    6. Dmitry Lubensky, 2017. "A model of recommended retail prices," RAND Journal of Economics, RAND Corporation, vol. 48(2), pages 358-386, May.
    7. Raluca M. Ursu, 2018. "The Power of Rankings: Quantifying the Effect of Rankings on Online Consumer Search and Purchase Decisions," Marketing Science, INFORMS, vol. 37(4), pages 530-552, August.
    8. Paul Belleflamme & Martin Peitz, 2019. "Managing competition on a two‐sided platform," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 5-22, January.
    9. White, Alexander, 2013. "Search engines: Left side quality versus right side profits," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 690-701.
    10. Heski Bar-Isaac & Guillermo Caruana & Vicente Cunat, 2012. "Search, Design, and Market Structure," American Economic Review, American Economic Association, vol. 102(2), pages 1140-1160, April.
    11. Yongmin Chen & Tianle Zhang, 2018. "Entry and Welfare in Search Markets," Economic Journal, Royal Economic Society, vol. 128(608), pages 55-80, February.
    12. Yongmin Chen & Chuan He, 2011. "Paid Placement: Advertising and Search on the Internet," Economic Journal, Royal Economic Society, vol. 121(556), pages 309-328, November.
    13. Zhou, Jidong, 2009. "Prominence and Consumer Search: The Case With Multiple Prominent Firms," MPRA Paper 12554, University Library of Munich, Germany.
    14. Mark Armstrong & John Vickers & Jidong Zhou, 2009. "Prominence and consumer search," RAND Journal of Economics, RAND Corporation, vol. 40(2), pages 209-233, June.
    15. Feng Zhu & Qihong Liu, 2018. "Competing with complementors: An empirical look at Amazon.com," Strategic Management Journal, Wiley Blackwell, vol. 39(10), pages 2618-2642, October.
    16. Asher Wolinsky, 1986. "True Monopolistic Competition as a Result of Imperfect Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(3), pages 493-511.
    17. Hagiu, Andrei & Wright, Julian, 2015. "Multi-sided platforms," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 162-174.
    18. Moshe A. Barach & Joseph M. Golden & John J. Horton, 2019. "Steering in Online Markets: The Role of Platform Incentives and Credibility," NBER Working Papers 25917, National Bureau of Economic Research, Inc.
    19. Simon P. Anderson & Regis Renault, 1999. "Pricing, Product Diversity, and Search Costs: A Bertrand-Chamberlin-Diamond Model," RAND Journal of Economics, The RAND Corporation, vol. 30(4), pages 719-735, Winter.
    20. Mark Armstrong & Jidong Zhou, 2011. "Paying for Prominence," Economic Journal, Royal Economic Society, vol. 121(556), pages 368-395, November.
    21. Anderson, Simon P & de Palma, Andre & Nesterov, Yurii, 1995. "Oligopolistic Competition and the Optimal Provision of Products," Econometrica, Econometric Society, vol. 63(6), pages 1281-1301, November.
    22. Glenn Ellison & Sara Fisher Ellison, 2009. "Search, Obfuscation, and Price Elasticities on the Internet," Econometrica, Econometric Society, vol. 77(2), pages 427-452, March.
    23. Huanxing Yang, 2013. "Targeted search and the long tail effect," RAND Journal of Economics, RAND Corporation, vol. 44(4), pages 733-756, December.
    24. Kfir Eliaz & Ran Spiegler, 2011. "A Simple Model of Search Engine Pricing," Economic Journal, Royal Economic Society, vol. 121(556), pages 329-339, November.
    25. Chris Nosko & Steven Tadelis, 2015. "The Limits of Reputation in Platform Markets: An Empirical Analysis and Field Experiment," NBER Working Papers 20830, National Bureau of Economic Research, Inc.
    26. Nicolas de Roos, 2018. "Collusion with limited product comparability," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 481-503, September.
    27. Kenneth S. Corts, 2014. "Finite Optimal Penalties for False Advertising," Journal of Industrial Economics, Wiley Blackwell, vol. 62(4), pages 661-681, December.
    28. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-1672, September.
    29. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
    30. Feng Zhu, 2019. "Friends or foes? Examining platform owners’ entry into complementors’ spaces," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 23-28, January.
    31. Salvatore Piccolo & Piero Tedeschi & Giovanni Ursino, 2015. "How limiting deceptive practices harms consumers," RAND Journal of Economics, RAND Corporation, vol. 46(3), pages 611-624, September.
    32. Han Hong & Matthew Shum, 2006. "Using price distributions to estimate search costs," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 257-275, June.
    33. Thomas Blake & Chris Nosko & Steven Tadelis, 2016. "Returns to Consumer Search: Evidence from eBay," NBER Working Papers 22302, National Bureau of Economic Research, Inc.
    34. Andrei Hagiu & Bruno Jullien, 2011. "Why do intermediaries divert search?," RAND Journal of Economics, RAND Corporation, vol. 42(2), pages 337-362, June.
    35. Kenneth Burdett & Tara Vishwanath, 1988. "Declining Reservation Wages and Learning," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(4), pages 655-665.
    36. Yongmin Chen & Tianle Zhang, 2018. "Entry and Welfare in Search Markets," Economic Journal, Royal Economic Society, vol. 128(608), pages 55-80, February.
    37. Glenn Ellison & Alexander Wolitzky, 2012. "A search cost model of obfuscation," RAND Journal of Economics, RAND Corporation, vol. 43(3), pages 417-441, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ben Casner, 2021. "Learning while shopping: an experimental investigation into the effect of learning on consumer search," Experimental Economics, Springer;Economic Science Association, vol. 24(1), pages 238-273, March.
    2. Yassine Lefouili & Leonardo Madio, 2022. "The economics of platform liability," European Journal of Law and Economics, Springer, vol. 53(3), pages 319-351, June.
    3. Jay Pil Choi & Doh‐Shin Jeon, 2023. "Platform design biases in ad‐funded two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 54(2), pages 240-267, June.
    4. Doh-Shin Jeon & Yassine Lefouili & Leonardo Madio, 2021. "Platform Liability and Innovation," Working Papers 21-05, NET Institute.
    5. Martin Peitz, 2023. "Governance and Regulation of Platforms," CRC TR 224 Discussion Paper Series crctr224_2023_480, University of Bonn and University of Mannheim, Germany.
    6. Huang, Yangguang & Xie, Yu, 2023. "Search algorithm, repetitive information, and sales on online platforms," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    7. José Ignacio Heresi, 2023. "Platform Price Parity Clauses and Consumer Obfuscation," Journal of Industrial Economics, Wiley Blackwell, vol. 71(1), pages 291-322, March.
    8. Janssen, Maarten & Williams, Cole, 2021. "Influencing Search," CEPR Discussion Papers 15811, C.E.P.R. Discussion Papers.
    9. Muxin Li, 2023. "Do Lower Search Costs Benefit Intermediaries?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 63(3), pages 373-405, November.
    10. Alessandro De Chiara & Ester Manna & Antoni Rubí-Puig & Adrian Segura-Moreiras, 2021. "Efficient copyright filters for online hosting platforms," Working Papers 21-03, NET Institute.
    11. Johnen, Johannes & Ng, Robin, 2023. "Ratings and Reciprocity," LIDAM Discussion Papers CORE 2023006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    12. Leonardo Madio, 2023. "Content Moderation and Advertising in Social Media Platforms," "Marco Fanno" Working Papers 0297, Dipartimento di Scienze Economiche "Marco Fanno".
    13. Jay Pil Choi & Doh-Shin Jeon, 2022. "Platform Design Biases in Ad-Funded Two-Sided Markets," Post-Print hal-04018490, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zemin (Zachary) Zhong, 2023. "Platform Search Design: The Roles of Precision and Price," Marketing Science, INFORMS, vol. 42(2), pages 293-313, March.
    2. Chen, Yongmin & Zhang, Tianle, 2018. "Intermediaries and consumer search," International Journal of Industrial Organization, Elsevier, vol. 57(C), pages 255-277.
    3. Chen, Yongmin & Li, zhuozheng & Zhang, Tianle, 2019. "A Search Model of Experience Goods," MPRA Paper 93547, University Library of Munich, Germany.
    4. Alexandre de Cornière, 2016. "Search Advertising," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 156-188, August.
    5. Chen, Yongmin, 2023. "Search and Competition Under Product Quality Uncertainty," MPRA Paper 116609, University Library of Munich, Germany.
    6. Raluca M. Ursu & Daria Dzyabura, 2020. "Retailers’ product location problem with consumer search," Quantitative Marketing and Economics (QME), Springer, vol. 18(2), pages 125-154, June.
    7. Huang, Yangguang & Xie, Yu, 2023. "Search algorithm, repetitive information, and sales on online platforms," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    8. Chia-Ling Hsu & Rafael Matta & Sergey V. Popov & Takeharu Sogo, 2017. "Optimal Product Placement," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(1), pages 127-145, August.
    9. Mark Armstrong, 2017. "Ordered Consumer Search," Journal of the European Economic Association, European Economic Association, vol. 15(5), pages 989-1024.
    10. Fershtman, Chaim & Fishman, Arthur & Zhou, Jidong, 2018. "Search and categorization," International Journal of Industrial Organization, Elsevier, vol. 57(C), pages 225-254.
    11. Wei Zhou & Zidong Wang, 2020. "Competing for Search Traffic in Query Markets: Entry Strategy, Platform Design, and Entrepreneurship," Working Papers 20-12, NET Institute.
    12. Florian Morath & Johannes Münster, 2018. "Online Shopping and Platform Design with Ex Ante Registration Requirements," Management Science, INFORMS, vol. 64(1), pages 360-380, January.
    13. Martin Obradovits & Philipp Plaickner, 2023. "Price-Directed Search, Product Differentiation and Competition," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 63(3), pages 317-348, November.
    14. Jidong Zhou, 2020. "Improved Information in Search Markets," Cowles Foundation Discussion Papers 2264R, Cowles Foundation for Research in Economics, Yale University, revised Jun 2022.
    15. Ding, Yucheng & Zhang, Tianle, 2018. "Price-directed consumer search," International Journal of Industrial Organization, Elsevier, vol. 58(C), pages 106-135.
    16. Alexandre de Corniere, 2013. "Search Advertising," Economics Series Working Papers 649, University of Oxford, Department of Economics.
    17. Hana Choi & Carl F. Mela, 2019. "Monetizing Online Marketplaces," Marketing Science, INFORMS, vol. 38(6), pages 948-972, November.
    18. Haan, Marco A. & Moraga-González, José L. & Petrikaitė, Vaiva, 2018. "A model of directed consumer search," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 223-255.
    19. Jan Krämer, & Daniel Schnurr,, 2018. "Is there a need for platform neutrality regulation in the EU?," Telecommunications Policy, Elsevier, vol. 42(7), pages 514-529.
    20. Chen Jin & Luyi Yang & Kartik Hosanagar, 2023. "To Brush or Not to Brush: Product Rankings, Consumer Search, and Fake Orders," Information Systems Research, INFORMS, vol. 34(2), pages 532-552, June.

    More about this item

    Keywords

    Search obfuscation; Two-sided markets; Platforms; Screening; Recommendations;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:indorg:v:72:y:2020:i:c:s0167718720300825. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505551 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.