248 / 2024-04-23 20:22:52

Review Manipulation in Multi-Product Firms: Implications for E-commerce

review manipulation,fake review,product line design,information complementarity,E-commerce

Sellers on platforms often utilize conditional rebates to facilitate (positive) reviews, raising social concerns about the prevalence of fake reviews. In this paper, we examine how conditional rebates affect review outcomes in multi-product markets and further shape the firm's product line decisions. We propose a general two-period model to capture online review dynamics,  where each product incorporates three components: an overall value consisting of idiosyncratic vertical and common horizontal attributes, price, and conditional rebate. Our results reveal that while conditional rebates can lead to an upsurge of fake reviews, they may boost authentic reviews under certain circumstances. Interestingly, when leveraging conditional rebates, the firm may prefer high-quality single-product offerings over multiple products to avoid multi-product cannibalization, which dilutes its price discrimination effectiveness. Moreover, firms that offer a wider product line are more inclined to provide low rebates, thus making the boosted-authentic-review equilibrium more viable and ultimately benefiting all pertinent stakeholders. These insights hold practical significance for the ongoing platform-policy debate regarding conditional rebates.