What's in the Box? The Effect of Self-Preferencing on Amazon

Abstract

We examine self-preferencing in Amazon’s ‘Similar item to consider’ box. We document a stark difference across domains; while Amazon frequently recommends alternatives to Amazon Basics (AB) products on the US website, it systematically suppresses these recommendations on the Canadian website. Leveraging this discontinuity, we estimate the causal effect of algorithmic exclusion due to self-preferencing. We find that non-AB products that merit a recommendation in the US but are denied one in Canada suffer a 11% decrease in the volume of sales. This finding quantifies the significant market distortion caused when gatekeepers favor their own inventory over rival goods.