A Game-Theoretic Model for Product Placement in Online Platform Markets

Zhenzhe Zheng, R. Srikant

Research output: Contribution to journalConference article

Abstract

Motivated by online platforms such as Amazon, Airbnb, etc.; we consider the following Bertrand game model of product placement: a number of sellers (e.g.; apartment owners) are interested in placing their products on a platform's (e.g.; Airbnb.com) website. We assume that the price of a product is determined by the the number of available sellers and their qualities, and the probability with which a platform user will buy a product is a function of the prices and the qualities, according to a multinomial logit model. In other words, the outcomes, i.e.; the realized prices and sales, are determined by the Nash equilibrium of a Bertrand game. The platform can affect the outcome of the game by deciding on a mechanism to determine which products to display on their websites. For such a Bertrand game, we derive optimal mechanisms for the platform to maximize either social welfare or revenue.

Original languageEnglish (US)
Pages (from-to)259-261
Number of pages3
JournalIFAC-PapersOnLine
Volume52
Issue number20
DOIs
StatePublished - 2019
Event8th IFAC Workshop on Distributed Estimation and Control in Networked Systems, NECSYS 2019 - Chicago, United States
Duration: Sep 16 2019Sep 17 2019

Keywords

  • Display Control
  • Game Theory
  • Online Platforms
  • Operations Research
  • Two-Sided Market

ASJC Scopus subject areas

  • Control and Systems Engineering

Fingerprint Dive into the research topics of 'A Game-Theoretic Model for Product Placement in Online Platform Markets'. Together they form a unique fingerprint.

  • Cite this