Template-Type: ReDIF-Paper 1.0
Title: Recommendation Power and Competition
Author-Name: Martin Peitz
Author-Email: Martin.Peitz@gmail.com
Author-Name: Anton Sobolev
Author-Email: anton.sobolev@uni-mannheim.de

Classification-JEL: L12, L13, L15, D21, D42, D43, M37

Keywords: recommendation bias, recommender system, competition

Abstract: A firm may decide to make total-surplus-reducing purchase recommendations in
response to consumer heterogeneity in an experience good setting. First, we show
under which conditions the firm chooses to make such biased recommendations in a
monopoly setting. Second, we propose a duopoly model with differentiated products
in which single-product firms compete in uniform prices and recommendation policies.
We provide conditions under which both firms choose to bias their recommendations,
whereas the bias would be absent if products were more differentiated or one of the two
products were withdrawn from the market.


Note: 
Length: 45
Creation-Date: 2025-11
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp715
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2025_715