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LED YES seminar - Luise Eisfeld, Toulouse School of Economist
By Fabrizio Ciotti

Luise Eifeld

Toulouse School of Economist

will give a presentaion on

How do Online Product Rankings Influence Sellers’ Pricing Behavior?

Kevin Tran (University of Bristol) will discuss the paper after Luise's presentation.


Products that are displayed more prominently on e-commerce platforms are more likely to be found and purchased by consumers. The algorithms ranking these products, however, may condition a product’s position on its price, and can thus intensify, or weaken price competition between sellers. I set up a simple theoretical framework in which hotels offering rooms on a booking platform take into account not only the usual, direct effect of their price on demand, but also the effect of their price on their position in the ranking. Using data scraped from Expedia, I find that for a given hotel, a lower price leads to a more prominent position on the results page. For the demand side, I estimate utility parameters of a sequential search model following Ursu (2018), using additional consumer search data. The parameters on the ranking side as well as the consumer side allow me to simulate how variations to the ranking algorithm affect hotel prices and markups.

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