Advertising Decisions of Platform Supply Chains Considering Network Externalities and Fairness Concerns

Liang Shen, Fei Lin, Yuyan Wang, Xin Su, Hua Li and Rui Zhou
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Liang Shen: School of Public Finance and Taxation, Shandong University of Finance and Economics, Jinan 250014, China
Fei Lin: School of Public Finance and Taxation, Shandong University of Finance and Economics, Jinan 250014, China
Yuyan Wang: Business School, Shandong Normal University, Jinan 250014, China
Xin Su: School of Business Administration, Shandong University of Finance and Economics, Jinan 250014, China
Hua Li: School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China
Rui Zhou: Department of Industrial and Systems Engineering, The University of Tennessee, Knoxville, TN 37996, USA

Mathematics, 2022, vol. 10, issue 13, 1-21

Abstract: With the popularization of platform economics, many manufacturers are shifting their operations from offline to online, forming platform supply chains (PSCs), which combine e-commerce with supply chain management. To study the influences of network externalities and fairness concerns on advertising strategies of the platform supply chain (PSC), we construct decentralized decision-making models, with and without fairness concerns. Then, we solve the optimal decisions regarding PSC and use numerical examples to verify the conclusions of the decision models. We further analyze the internal influences of advertising strategies on network externalities in the extended model. We find that the network externalities are beneficial to the PSC system, but the manufacturer’s fairness concerns are not beneficial to the PSC. The advertising strategies of the network platform are not affected by network externalities and fairness concerns. In the extended model, the manufacturer can obtain more profits, but the network platform yields less profit than the decentralized model without fairness concerns. Moreover, the more sensitive the network externalities are to the change in advertising strategies, the greater the profits for the PSC members.

Keywords: e-commerce; platform supply chain; network externalities; advertising strategy; fairness concerns (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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