Topic: Product Featuring and Dual Role of Digital Platform

Lecturer: Assistant Prof. Ruitong Wang, TONGJISEM, Tongji University

Time: 14:30-16:00 p.m. June 8th, 2023

Venue: B423 Zhixin Building, Central Campus

Abstract: A digital platform provides the marketplace that connects 3rd-party merchants to consumers and simultaneously participates in its marketplace by selling its private label to consumers. This dual role raises the concern that the platform may be self-preferencing, leading to unfair competition and thus harming merchants and consumers. We develop a game-theoretical model to investigate the implication of dual role on the platform's product featuring strategy, seller's pricing strategy, and the consumer's welfare. We show that the platform presents an "intermediary bias" such that it may not feature the best possible product to consumers, regardless of whether the platform is under sole marketplace mode or under the dual role. Surprisingly, the platform's dual role may dwindle its intermediary bias and intensifies price competition in the marketplace. Consequently, banning the dual role may not always be welfare - improving to consumers. Furthermore, we find that prohibition of the platform's product imitation can be harmful to consumers when the dual role is still allowed.