Impact of FTC's Allegation on Amazon's Marketplace: Evidence From Coffee Products

ABSTRACT How do firms respond to regulatory allegations? The monopolist lawsuit by the Federal Trade Commission (FTC) against Amazon provides an avenue to answer this question. Applying difference‐in‐differences to panel data of ground coffee products from Amazon's marketplace in the United States and Canada, we find that Fulfillment by Amazon (FBA) fees were reduced by $0.27–$0.29 per product in the United States due to the FTC's monopolist allegation. We also find that the allegation led to price reductions of $0.79–$0.92 per product in the country. Since 42% of the 7.5 billion products sold on Amazon United States in 2023 were by FBA sellers, we estimate that the allegation led to an annual savings of $0.85 billion to $0.91 billion for the FBA sellers and $5.92 billion to $6.85 billion for Amazon's customers on average. These results suggest that the FTC's allegation had sizeable and positive welfare impacts on Amazon's third‐party sellers and customers, making it a significant win for the regulatory agency. Moreover, our study provides insights into the implications of the FTC allegation for agribusiness stakeholders and the future of grocery shopping.