Vertical Integration and Consumer Choice: Evidence from a Field Experiment

Résumé

Digital platforms offer consumers vertically integrated products alongside third-party alternatives. Using a field experiment that hides Amazon brands, we quantify the impacts of vertical integration—through both the availability of private labels and their placement in search results. In their absence, consumers choose similar products with no increase in search effort or cross-platform substitution. Yet some consumers prefer Amazon brands, and removing these products reduces consumer welfare by 5.5 percent. Contrary to concerns about self-preferencing, demoting Amazon brands in search results does not increase welfare, as heterogeneous preferences make their prominent placement valuable to a meaningful share of consumers.