By studying the competition between a B2C platform and a third-party seller, the purpose of this paper is to analyze and compare their optimal decisions and profits between cases with and without sales effort of the platform or third-party seller.
This paper studies the competition between a B2C platform and a third-party seller. The platform sells a product directly, and allows the third-party seller to sell a competing product on the platform. Based on whether the platform or the third-party seller makes sales effort, there are four scenarios. The paper analyzes the optimal decisions and profits of platform and third-party seller under each scenario, respectively.
The transaction fee has a negative effect on third-party seller’s sales effort level. What is more, the platform can take a free riding from the third-party seller’s sales effort, but the platform’s sales effort has a negative effect on the profit of third-party seller.
These results provide managerial insights for the platform and the third-party seller to make decisions.
This paper is among the first papers to study the competition between B2C platform and third-party seller.
The authors are grateful to the editor and the anonymous referees for their constructive comments, which substantially helped the authors to improve the quality of the manuscript. This work is supported by the National Natural Science Foundation of China (No. 71571159).
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