Is ranking position equal to pricing power?—Evidence from Chinese e-commerce platforms

In two-sided markets, online sellers' pricing power is effectively affected by their ranking positions. Given that consumers' ordered search and sales volumes are concentrated on top sellers on e-commerce platforms, we use a theoretical model and empirically test the impact of ranking positions on the pricing power of online sellers on e-commerce platforms. We find that top sellers have stronger pricing power derived from their prominent ranking positions and consumers' search costs. However, later sellers also have some pricing power derived from the long-tail effect in e-commerce markets, and ranking positions can screen consumers’ special preferences. In an ordered search, later sellers face fewer consumers, but their demand preferences are more concentrated.