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Dynamic selling strategy for a firm under asymmetric information: Direct selling vs. agent selling

Ciwei Dong, Yunpeng Yang and Ming Zhao

International Journal of Production Economics, 2018, vol. 204, issue C, 204-213

Abstract: In this paper, we study the dynamic selling strategy for a firm under asymmetric market and product information over two periods. In each period, the firm can sell the product directly to customers, i.e., direct selling, or through an intermediary retailer such as Amazon and eBay, i.e., agent selling. Before the selling season, the firm is uncertain about the market size and the customers are unaware of whether the product matches their tastes. However, by directly interacting with the customers, the firm under direct selling or the retailer under agent selling will obtain additional market information at the end of the first period. Meanwhile, customers in the second period can resolve their product fit uncertainty by accessing the review comments posted by previous customers, if agent selling is adopted in the first period.

Keywords: Dynamic selling strategy; Multiple periods; Decentralization; Asymmetric information; Information sharing (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:proeco:v:204:y:2018:i:c:p:204-213