Title:
Essays on Digital Goods and Online Markets
Essays on Digital Goods and Online Markets
Author(s)
Hu, Hao
Advisor(s)
Niculescu, Marius Florin
Wu, D.J.
Wu, D.J.
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Abstract
Information technology has revolutionized the way in which sellers engage with potential customers and distribute their products through online channels. However, they also face increasing challenges to remain competitive. For example, in the software industry, the plethora of available applications leads to a highly competitive landscape, making it difficult for new entrants to gain visibility and attract consumer interest. For online platforms, the platform owner not only serves as an intermediary for sellers and buyers but also introduces its own private-label products, further intensifying competition with third-party sellers.
This dissertation investigates the strategic actions sellers undertake to tackle these challenges. In the first essay, we build a game-theoretical model to examine two prevalent strategies, seeding and time-limited freemium, that developers can employ to spur adoption by helping consumers directly or indirectly learn the value of their products. We offer managerial recommendations on the optimal circumstances for implementing each strategy, considering factors such as social and self-learning dynamics, adoption costs, and product value depreciation.
In the second essay, we study the impacts of Amazon launching its private-label products and engaging in self-preferencing for these products on third-party sellers. Our findings show that although Amazon favors its own products in search results, the average sales of third-party products in the affected categories increase more than those in unaffected categories. We then investigate several mechanisms that could contribute to this change. We find that Amazon's private-label products displace lower-quality sellers, foster variety in product designs, and serve as valuable references for third-party sellers to improve their searchability. These factors potentially lead to higher sales and ultimately an increase in consumer welfare, with little impact on prices.
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Date Issued
2023-04-25
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Text
Resource Subtype
Dissertation