Supply chain channel structure with online platform and dual-purpose firms

Song Huang, Yuqing Gao and Yun Wang

Transportation Research Part E: Logistics and Transportation Review, 2023, vol. 180, issue C

Abstract: This study examines the equilibrium channel structure strategy in a supply chain where a manufacturer can sell products to consumers via/on an online platform, and firms may focus on both profit and consumer surplus. We consider three supply chain channel structures: a reselling channel (mode R), wherein the platform acts as the reseller; an agency channel (mode A), wherein the platform acts as the marketplace; and a dual channel (mode D), wherein the platform acts as both the reseller and marketplace. This study explores the strategic effect of the dual-purpose concern on the co-opetition relationship of firms and derives ramifications for the optimal channel structure. First, the platform may abandon mode A when the manufacturer’s consumer surplus concern is high, even if the commission rate is high. This is because the manufacturer’s sales revenue may be harmed by the higher selling quantity and lower price resulting from the increased concern of consumer surplus in mode A. The manufacturer prefers mode D (mode R) only when the commission rate is low (high). However, the supply chain may prefer mode R (mode D) when the platform’s consumer surplus concern is high (low) irrespective of the commission rate. Second, with dual-purpose firms, both the platform and manufacturer may prefer mode R (mode D) when the commission rate is medium and the platform’s consumer surplus concern is high (low). Third, mode A is beneficial to consumer surplus and social welfare as long as agency selling is viable, which occurs when the consumer surplus concern and the commission rate are not too high; otherwise, mode D is the optimal choice, because it enables the supply chain to sell products to consumers in a more flexible way. Finally, the results are robust to a parsimonious dual-purpose platform, an imperfect competitive market, price competition with a dominant platform, multiple competing manufacturers, and a non-zero slotting fee.

Keywords: Channel structure; Dual-purpose firms; Online platform; Co-opetition (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1366554523003514
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:180:y:2023:i:c:s1366554523003514

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/bibliographic
http://www.elsevier. ... 600244/bibliographic

DOI: 10.1016/j.tre.2023.103363

Access Statistics for this article

Transportation Research Part E: Logistics and Transportation Review is currently edited by W. Talley

More articles in Transportation Research Part E: Logistics and Transportation Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().