Optimal Search Segmentation Mechanisms for Online Platform Markets

Zhenzhe Zheng, R. Srikant

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Online platforms, such as Airbnb, hotels.com, Amazon, Uber and Lyft, can control and optimize many aspects of product search to improve the efficiency of marketplaces. Here we focus on a common model, called the discriminatory control model, where the platform chooses to display a subset of sellers who sell products at prices determined by the market and a buyer is interested in buying a single product from one of the sellers. Under the commonly-used model for single product selection by a buyer, called the multinomial logit model, and the Bertrand game model for competition among sellers, we show the following result: to maximize social welfare, the optimal strategy for the platform is to display all products; however, to maximize revenue, the optimal strategy is to only display a subset of the products whose qualities are above a certain threshold. This threshold depends on the quality of all products, and can be computed in linear time in the number of products.

Original languageEnglish (US)
Title of host publicationWeb and Internet Economics - 15th International Conference, WINE 2019, Proceedings
EditorsIoannis Caragiannis, Vahab Mirrokni, Evdokia Nikolova
PublisherSpringer
Pages301-315
Number of pages15
ISBN (Print)9783030353889
DOIs
StatePublished - Jan 1 2019
Event15th Conference on Web and Internet Economics, WINE 2019 - New York City, United States
Duration: Dec 10 2019Dec 12 2019

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume11920 LNCS
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Conference

Conference15th Conference on Web and Internet Economics, WINE 2019
CountryUnited States
CityNew York City
Period12/10/1912/12/19

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Keywords

  • Bertrand competition game
  • Online platform markets
  • Search segmentation

ASJC Scopus subject areas

  • Theoretical Computer Science
  • Computer Science(all)

Cite this

Zheng, Z., & Srikant, R. (2019). Optimal Search Segmentation Mechanisms for Online Platform Markets. In I. Caragiannis, V. Mirrokni, & E. Nikolova (Eds.), Web and Internet Economics - 15th International Conference, WINE 2019, Proceedings (pp. 301-315). (Lecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics); Vol. 11920 LNCS). Springer. https://doi.org/10.1007/978-3-030-35389-6_22