Information Sharing on Retail Platforms

Topic:

Information Sharing on Retail Platforms

Time&Date: 

 10:30-11:45 am, 2019/12/27 (Friday)

Venue:

 Room 619, Teaching A

Speaker:

Prof. Fuqiang Zhang (Washington University in St. Louis)

Abstract:

Due to the rapid growth of retail platforms in recent years, information sharing has become an increasingly important issue because retail platforms can gather an enormous amount of consumer information that may not be visible to the sellers. Understanding how to share such information with those sellers will provide useful implications from both the theoretical and practical perspectives. We develop a game-theoretic model where multiple sellers compete on a retail platform by selling substitutable products, and the platform charges a commission fee for each transaction. The platform owns superior demand information and can control the accuracy level when sharing the information with the sellers. We find that the platform has incentives to share the information and such sharing is beneficial both to the platform and to all sellers. Under the asymmetric information sharing format, the optimal strategy for the platform is to select a subgroup of sellers and truthfully share information with them. Under the symmetric sharing format, the platform must share the same information with all sellers and thus has incentives to reduce the accuracy of the shared information. Moreover, we identify a simple pricing mechanism that can achieve the optimal information sharing outcome.