Tiancheng Chen - Practice JMT

Value of Market Analytics: Evidence from Online Lipstick Sellers

    Date:  10/14/2020 (Wed)

    Time:  11:45am- 1:00pm

    Organizer:  Tiancheng Chen

Meeting Schedule: (Not currently open for scheduling. Please contact the seminar organizer listed above.)

   11:45am - Seminar Presentation (11:45am to 1:00pm)

    Additional Comments:  Abstract: When making product assortment decisions, firms have uncertainty about how much profit each product will generate. What's the value of giving firms the product profitability information? To answer this, I look at lipstick sellers in an online platform, where I observe who gets the profitability information, and how precise their information is. I find an exogenous policy change that gives some sellers more precise information leads to 40\% higher seller revenue, 20\% higher rate of introducing a new lipstick, and makes the treated sellers start to sell more profitable products. Through affecting what products are offered in the online platform, this information is valuable for consumers and the platform: consumer welfare and total sales will go down by 0.8\% and 8\%, respectively, if there is no such information. Furthermore, the platform could gain another 8\% increase in total sales by providing even more precise information; in this case, consumer welfare also increases by 0.8\%. The platform optimal information policy gives very similar outcomes as the social optimal one, showing that consumers and the platform share very similar preferences.