Consumer attention and market concentration in e-commerce: an agent-based perspective

Abstract

This study explores how limited consumer attention influences market concentration in e-commerce. Consumer attention, a scarce resource amidst abundant product information, plays a crucial role in shaping market dynamics. Despite its importance, the effect of limited consumer attention on e-commerce market concentration has not been extensively studied. Using agent-based modeling, we examine the interplay of consumer behaviors, bounded rationality, and social interactions in complex markets. Our results reveal that e-commerce market concentration persists even without product differentiation among sellers. Notably, a negative correlation emerges between consumer attention and market concentration, consistent across different market sizes and social connection densities. These findings provide theoretical insights into market concentration patterns in the Internet economy and contribute to the broader understanding of market structure dynamics.