1. Increased revenue potential for Amazon.
2. Competitors may also benefit from higher prices if they are able to follow suit. 3. It can lead to a more sustainable business model for Amazon. 4. Testing different pricing strategies can provide valuable market insights.
1. Customers may face higher prices for products.
2. Potential for reduced competition if competitors are forced to raise their prices as well. 3. It may result in a negative perception of Amazon’s pricing practices. 4. Some customers may switch to alternative platforms for lower-priced options.
In a hidden section of the Federal Trade Commission’s monopoly lawsuit, it was revealed that Amazon utilized a secret algorithm called “Project Nessie” to gauge the extent to which it could increase prices and still have competitors follow suit. This algorithmic experiment aimed to test the boundaries of pricing power.