Price Stability and Improved Buyer Utility with Presentation Design: A Theoretical Study of the Amazon Buy Box
Fuente:
arXiv
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Preprint |
| Published: |
2025
|
| Subjects: | |
| Online Access: | |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1866909586162712576 |
|---|---|
| author | Friedler, Ophir Fu, Hu Karlin, Anna Tang, Ariana |
| author_facet | Friedler, Ophir Fu, Hu Karlin, Anna Tang, Ariana |
| contents | Platforms design the form of presentation by which sellers are shown to the buyers. This design not only shapes the buyers' experience but also leads to different market equilibria or dynamics. One component in this design is through the platform's mediation of the search frictions experienced by the buyers for different sellers. We take a model of monopolistic competition and show that, on one hand, when all sellers have the same inspection costs, the market sees no stable price since the sellers always have incentives to undercut each other, and, on the other hand, the platform may stabilize the price by giving prominence to one seller chosen by a carefully designed mechanism. This calls to mind Amazon's Buy Box. We study natural mechanisms for choosing the prominent seller, characterize the range of equilibrium prices implementable by them, and find that in certain scenarios the buyers' surplus improves as the search friction increases. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2504_14793 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Price Stability and Improved Buyer Utility with Presentation Design: A Theoretical Study of the Amazon Buy Box Friedler, Ophir Fu, Hu Karlin, Anna Tang, Ariana Computer Science and Game Theory Theoretical Economics Platforms design the form of presentation by which sellers are shown to the buyers. This design not only shapes the buyers' experience but also leads to different market equilibria or dynamics. One component in this design is through the platform's mediation of the search frictions experienced by the buyers for different sellers. We take a model of monopolistic competition and show that, on one hand, when all sellers have the same inspection costs, the market sees no stable price since the sellers always have incentives to undercut each other, and, on the other hand, the platform may stabilize the price by giving prominence to one seller chosen by a carefully designed mechanism. This calls to mind Amazon's Buy Box. We study natural mechanisms for choosing the prominent seller, characterize the range of equilibrium prices implementable by them, and find that in certain scenarios the buyers' surplus improves as the search friction increases. |
| title | Price Stability and Improved Buyer Utility with Presentation Design: A Theoretical Study of the Amazon Buy Box |
| topic | Computer Science and Game Theory Theoretical Economics |
| url | https://arxiv.org/abs/2504.14793 |