Insider Imitation

Department of Economics & Decision Sciences

Speaker : Nikhil Vellodi

Assistant Professor at PSE

Room T017

Abstract:

Many platforms operating online marketplaces sell their own products alongside those of third-party sellers, and may use marketplace data on the demand for third-party products to inform the launch of their own products.  To evaluate the anti-competitive implications of this practice, we develop a model in which a platform can use marketplace data to launch their own product. Our main finding uncovers conditions on demand that determine the effect of a ban on such data usage by the platform.   Specifically, the ban stimulates innovation for ``experimental'' products with significant upside demand potential, but stifles it for ``incremental'' products with little upside potential.