Dynamic Pricing Recognition on E-Commerce Platforms with VAR Processes

Alexander Faehnle and Mariangela Guidolin
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Alexander Faehnle: Alten Italia, 35131 Padua, Italy
Mariangela Guidolin: Department of Statistical Sciences, University of Padua, 35121 Padua, Italy

Forecasting, 2021, vol. 3, issue 1, 1-15

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.

Keywords: dynamic pricing; e-commerce; VAR process; price competition; lasso penalization (search for similar items in EconPapers)
JEL-codes: A1 B4 C0 C1 C2 C3 C4 C5 C8 M0 Q2 Q3 Q4 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jforec:v:3:y:2021:i:1:p:11-180:d:510917

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