Title: Product Recommendations Systems and Price Competition
Abstract: We study competing retailers’ choice of product recommender systems and the impact of these choices on price competition. We start by comparing two approaches to product recommendation: (i) broadcast product recommendations, a one-size-fits-all, and (ii) personalized product recommendations. We examine the role of consumer reactance in moderating firms’ approach to product recommendations. We then propose a competition-based rationale for the prevalent collaborative filtering approach to product recommendation.