European Center for Advanced Research in Economics and Statistics

Title: Selling on Recommender Platforms: DemandBoost versus Customer Migration

Abstract: We develop a model to study the pricing andwelfare implications of recommender platforms---i.e., platforms that providerecommendations about products that match a consumer's preference. Sellersoffer their product on the platform and on their direct channel. Consumers notonly have access to (some) seller's direct channel offerings and the platform'srecommendation, but they can also engage in costly sequential search on theplatform to discover additional products.

 We highlight novel trade-offs that occurbecause sellers are in an advantageous position when they are being recommendedbut in a disadvantages position when they try to appeal to consumers via theirdirect channel (which is not based on a recommendation).  As a result, ifthe platform raises its fee, inducing sellers to assign greater weight to theirdirect channel sales, the sellers' equilibrium price can fall. Likewise,improving the recommendation algorithm can also lead to a reduction of the equilibriumprice if the platform's commission fee is too large.

 We further endogenize the platform'scommission fee and show that the price level decreases as recommendationsimprove if search costs are high and increases if search costs are small. Wealso show that regulating data collection by the platform to reduce the qualityof recommendations raises consumer surplus if search costs are small, but canlower consumer surplus otherwise. Finally, we identify adverse effects ofcapping platform fees and of facilitating disintermediation.

Conference jointly organized by ECARES and Times²

The program will be available soon.

Conference jointly organized by ECARES and Times²

The program will be available soon.

Stepan Jurajda (Associate Professor of Economics at CERGE-EI, CZ will present : 

"McMonopsony"

​Abstract ​| Poster 
*Please contact Helene.Bertaux@ulb.be if you wish to participate (lunch is provided so please confirm your presence max. one week before the event).​

Title: "Media Consolidation" (joint with Josh McCrain, Gregory Martin, andNicola Mastrorocco

Abstract: Recent decades have seen major changes to the local mediaenvironment in the United States, with the absorption of many formerlyindependent local TV stations into conglomerates. Using a comprehensive datasetof acquisitions, we examine the effects of ownership by the three largesttelevision conglomerates on local news advertising, content, and viewership.Conglomerate owners consistently increase advertising duration during localnewscasts. We find large effects on stations' coverage of local events and localpolitics, but the direction of these effects varies across owners. Despitethese changes, viewer responses are minimal. We conclude by investigatingdownstream consequences on viewers' political knowledge.