Assessing Value in Product Networks
AbstractTraditionally, the value of a product has been assessed according to the direct revenues the product creates. However, products do not exist in isolation but rather influence one another's sales. Such influence is especially evident in eCommerce environments, where products are often presented as a collection of webpages linked by recommendation hyperlinks, creating a large-scale product network. Here we present the first attempt to use a systematic approach to estimate products' true value to a firm in such a product network. Our approach, which is in the spirit of the PageRank algorithm, uses easily available data from large-scale electronic commerce sites and separates a product’s value into its own intrinsic value, the value it receives from the network, and the value it contributes to the network. We apply this approach to data collected from Amazon.com and from BarnesAndNoble.com. Focusing on one domain of interest, we find that if products are evaluated according to their direct revenue alone, without taking their network value into account, the true value of the "long tail" of electronic commerce may be underestimated, whereas that of bestsellers might be overestimated.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 11-29.
Length: 47 pages
Date of creation: Sep 2011
Date of revision: Sep 2011
Contact details of provider:
Web page: http://www.NETinst.org/
networks; product networks; electronic commerce; ecommerce; recommender systems; long tail;
Find related papers by JEL classification:
- D4 - Microeconomics - - Market Structure and Pricing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-07 (All new papers)
- NEP-CMP-2011-11-07 (Computational Economics)
- NEP-MKT-2011-11-07 (Marketing)
- NEP-NET-2011-11-07 (Network Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hinz, Oliver & Eckert, Jochen & Skiera, Bernd, 2011. "Drivers of the Long Tail Phenomenon: An Empirical Analysis," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 56544, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
- Xavier Gabaix & Rustam Ibragimov, 2007. "Rank-1/2: A Simple Way to Improve the OLS Estimation of Tail Exponents," NBER Technical Working Papers 0342, National Bureau of Economic Research, Inc.
- Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2010. "Media, Aggregators and the Link Economy: Strategic Hyperlink Formation in Content Networks," Working Papers 10-13, NET Institute.
- Michaela Draganska & Michael Mazzeo & Katja Seim, 2009.
"Beyond plain vanilla: Modeling joint product assortment and pricing decisions,"
Quantitative Marketing and Economics,
Springer, vol. 7(2), pages 105-146, June.
- Draganska, Michaela & Seim, Katja & Mazzeo, Michael, 2007. "Beyond Plain Vanilla: Modeling Joint Product Assortment and Pricing Decisions," Research Papers 1982, Stanford University, Graduate School of Business.
- Babur de los Santos, 2008.
"Consumer Search on the Internet,"
2008-06, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
- Zsolt Katona & Miklos Sarvary, 2008. "Network Formation and the Structure of the Commercial World Wide Web," Marketing Science, INFORMS, vol. 27(5), pages 764-778, 09-10.
- Tucker, Catherine & Zhang, Juanjuan, 2007. "Long Tail or Steep Tail? A Field Investigation into How Online Popularity Information Affects the Distribution of Customer Choices," Working papers 39811, Massachusetts Institute of Technology (MIT), Sloan School of Management.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicholas Economides).
If references are entirely missing, you can add them using this form.