Managing a distribution channel under asymmetric information with performance requirements
Management Science - Special issue: Frontier research on information systems and economics
Reducing buyer search costs: implications for electronic marketplaces
Management Science - Special issue: Frontier research on information systems and economics
Multiple Messages to Retain Retailers: Signaling New Product Demand
Marketing Science
Frictionless Commerce? A Comparison of Internet and Conventional Retailers
Management Science
Third-Party Product Review and Firm Marketing Strategy
Marketing Science
The Long Tail: Why the Future of Business Is Selling Less of More
The Long Tail: Why the Future of Business Is Selling Less of More
Two-Sided Network Effects: A Theory of Information Product Design
Management Science
Pricing, Frills, and Customer Ratings
Marketing Science
How Does Popularity Information Affect Choices? A Field Experiment
Management Science
Uninformative Advertising as an Invitation to Search
Marketing Science
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While millions of products are sold on its retail platform, Amazon.com itself stocks and sells only a very small fraction of them. Most of these products are sold by third-party sellers who pay Amazon a fee for each unit sold. Empirical evidence clearly suggests that Amazon tends to sell high-demand products and leave long-tail products for independent sellers to offer. We investigate how a platform owner such as Amazon, facing ex ante demand uncertainty, may strategically learn from these sellers' early sales which of the “mid-tail” products are worthwhile for its direct selling and which are best left for others to sell. The platform owner's “cherry-picking” of the successful products, however, gives an independent seller the incentive to mask any high demand by lowering his sales with a reduced service level (unobserved by the platform owner). We analyze this strategic interaction between a platform owner and an independent seller using a game-theoretic model with two types of sellers---one with high demand and one with low demand. We show that it may not always be optimal for the platform owner to identify the seller's demand. Interestingly, the platform owner may be worse off by retaining its option to sell the independent seller's product, whereas both types of sellers may benefit from the platform owner's threat of entry. The platform owner's entry option may reduce consumer surplus in the early period, although it increases consumer surplus in the later period. We also investigate how consumer reviews influence the market outcome.