Abstract
In an environment such as e-commerce, characterized by the presence of numerous agents, competition based on product characteristics is a very important aspect. This paper proposes a model based on vector autoregressive processes (VAR) and Lasso penalization to detect and examine the dynamics that govern real-time price competition in electronic marketplaces. Employing this model, an empirical study was performed on the price trends of smartphone models on the major electronic sales platforms of the Italian market. The proposed model detects real-time price variations in single vendors, based on the variations of their direct competitors. The statistical method adopted in this analysis may be useful for e-commerce companies that conduct market analyses of competitors’ pricing strategies.
Highlights
In recent years, the volume of sales on e-commerce platforms has grown considerably
Retail is defined as the transaction of goods or services from the producer, or a sales intermediary, to the final consumer. It may occur through many channels, which can be grouped into two categories: The first reflects the traditional business model, called “bricks and mortar”, and is characterized by physical shops and stores where consumers go to make their purchases
This paper examined the dynamics of direct price competition on smartphone sales in electronic marketplaces, by employing vector autoregressive (VAR) processes
Summary
The volume of sales on e-commerce platforms has grown considerably. Today, it is not uncommon to find many offers with different prices for the same product at the same time. This paper examined the dynamics of direct price competition on smartphone sales in electronic marketplaces, by employing vector autoregressive (VAR) processes These processes allow study of the interdependence between various time series of prices of the same products and possibly the prediction of future price variations. Through an empirical study carried out over two months, the proposed model allowed us to efficiently and clearly identify direct price competition in terms of dynamic pricing during the observation period With this analysis, the paper aims to contribute to the literature on using VAR models for marketing problems, by focusing on the context of e-commerce, with a newly created dataset through a web-scraping procedure.
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