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Rating the Competition: Seller Ratings and Intra-Platform Competition
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Rating the Competition: Seller Ratings and Intra-Platform Competition

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  • Charlson, G.

Abstract

Product ratings are commonplace on large online platforms, like Airbnb and Amazon Marketplace. One use for these ratings is to order search results. Platform owners are able to choose the extent to which ratings can be used to determine the probability a given seller is observed by a sets of buyers. Since demand is higher for high quality products, there is an incentive to increase the probability that highly-rated sellers are observed by biasing search results towards them. However, biasing search results in this way results in competition being more concentrated, reducing prices. The extent to which it is profitable to use ratings as a means of ordering search results depends on the properties of the market(s) the platform operates in.

Suggested Citation

  • Charlson, G., 2021. "Rating the Competition: Seller Ratings and Intra-Platform Competition," Cambridge Working Papers in Economics 2106, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2106
    Note: gc556
    as

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    More about this item

    Keywords

    Networks; strategic interaction; network games; interventions; industrial organisation; platforms;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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