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Prominence of store-brand products in an electronic platform

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  • Hui Song

    (Guangdong University of Foreign Studies)

Abstract

This paper uses a search model to study the competition between a store brand and a third-party brand in a platform. Consumers sample products in a sequential ordering. Sampling cost is crucial for determining product orderings. We find that, the platform prefers making the third-party brand prominent when the outside market is closed, and generally prefers making the store brand prominent when there are infinitely many firms in the outside market. The difference in product ordering can be attributed to the strength of competition-intensifying effect and market-expansion effect. Generally speaking, the platform’s choice lowers down consumer surplus and social welfare.

Suggested Citation

  • Hui Song, 2021. "Prominence of store-brand products in an electronic platform," Journal of Economics, Springer, vol. 133(1), pages 47-83, June.
    • Handle: RePEc:kap:jeczfn:v:133:y:2021:i:1:d:10.1007_s00712-020-00726-4
    DOI: 10.1007/s00712-020-00726-4
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    References listed on IDEAS

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    More about this item

    Keywords

    Consumer search; Store brand; Search bias;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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