Price Stability and Improved Buyer Utility with Presentation Design — A Theoretical Study of the Amazon Buy Box
Accepted to The Web Conference 2025, Sydney Australia💖💖💖 Ophir Friedler, Hu Fu, Anna Karlin, Ariana Tang abstract Platforms design the form of presentation by which sellers are shown to the buyers. This design not only shapes the buyers’ experience but also leads to different market equilibria or dynamics. One component in this design is through the platform’s mediation of the search frictions experienced by the buyers for different sellers. We take a model of monopolistic competition and show that, on one hand, when all sellers have the same inspection costs, the market sees no stable price since the sellers always have incentives to undercut each other, and, on the other hand, the platform may stabilize the price by giving prominence to one seller chosen by a carefully designed mechanism....