| Abstract | The platform has coordinated and promoted both production and consumption, which facilities the social transaction as well as changes the behavior pattern of buyers and sellers. The total sales of Taobao, Tmall and Jingdong in 2017 amounts to RMB 5.5 trillion, which is the 80% of all the e-retailing and 16% of the total retail sales of consumer goods in China. Obviously, platforms is the essential retail channel in daily consumption.
Although the price search cost in e-commerce platform is almost zero, the price dispersion still exists, which might due to the information asymmetry. Many problems concerning platforms such as price discrimination, false information, and forged and fake commodores have drawn public attention recently. The facts indicates that the platform together with the sellers have the motivation and ability to implement strategic sales behavior, and obtain more profit by based on information asymmetry, which might impair the right-to-know and the right of fair trade of consumers, and could be bad for the development of platform economy. The fundamental characteristics of buying and selling behavior in platform worth a thorough and profound study. This paper uncovers the relationship between information asymmetry and strategic pricing behavior of seller in internet platform from both theoretical and empirical view.
Based on the traditional search theories, the theoretical analysis reveals the price pattern in with the new information asymmetry in the platform, and gives a possible explanation of the serious product quality problem. The price information asymmetry and the quality information asymmetry are the two sides of the same coin in nature, but the asymmetry of quality information could result in more price dispersion. Due to the existence of large quantity of sellers, the strategic behavior is the result of both price and quality, which is distinct from the classic literature based on homogeneous product. The asymmetry of quality information leads to the asymmetry of price information, which forms the special pattern of price dispersion in internet platform, and also opens the opportunity of more extensive and special pricing strategies, namely the joint distribution of quality and price.
In the empirical part, the paper examines the specific pattern of strategic pricing of sellers with more than 2.6 million data from Taobao, Tmall, and Jingdong e-commerce platforms. The result hotly only represents the static pattern of population distribution of price, but also discovers the evolving rules of dynamic changes of price, which has been seldom mentioned in the current literature to our knowledge, probably is limited to the availability of data. As the results show, the frequent price changes in platform present 3 rules: (1) the extent of price change goes negatively with the degree of information symmetry; (2) the probability of high price of seller goes negatively with the information symmetry; (3) the probability of easing price goes negatively with the information symmetry. Our empirical results strongly support that the information asymmetry is the foundation of strategic pricing of sellers in platform.
In the further heterogeneity test part, the degree of information asymmetry varies with product types, which indicates the possibility of reducing the information asymmetry in the platform. This is one of the conclusions that could be applied in the mechanisms design of the platform, or the platform regulation. First, the transaction rules of the platform should put more emphasis on the behavior features platform participants. The standard of information disclosure should be enhanced to the product with low trade frequency, and promote the informative advertising content; Secondly, the regulation of internet platform industry should focus on the protection and promotion of the right-to-know of consumers. Protecting the normal way of demand realization is the necessity of realizing the decisive role of market mechanism in the resource allocation; Thirdly, the sales promotion behavior of platform should be regulated properly; Fourthly, enhance the legislation of the protection and usage of private information of consumers. It’s a common thing that platforms charge discriminatory higher price to consumers with higher willingness to pay, and the primary reason is the abuse of consumer information in the case of information asymmetry. This trend could harm the social credit system seriously and needs to be watched closely.
Since the conclusions of this paper is drawn in the partial equilibrium context, there is the possibility that the strategic pricing behavior of sellers is result of the exploration and innovation in the long-term growth process. Nevertheless, certain behavior such as price discrimination cold impact the welfare distribution of platform participants, and should be regulated properly.
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