Self-building or cooperating with a service platform: how should a dual-channel firm implement a trade-in program?

Guang Yang (), Bo He () and Ruohan Ma ()
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Guang Yang: Chongqing University
Bo He: Chongqing University
Ruohan Ma: Chongqing University

Electronic Commerce Research, 2025, vol. 25, issue 3, No 7, 1544 pages

Abstract: Abstract Business practices demonstrate that firms can offer dual-channel trade-in programs by cooperating with a third-party trade-in service platform (i.e., cooperation mode) or on their own (i.e., self-building mode). This paper develops an analytical model to investigate the effect of a specific trade-in operation mode on the profitability of a dual-channel firm that implements a trade-in program. We characterize the equilibrium between the firm and the service platform. We identify the threshold of the self-building operational cost, above (below) which the firm’s profit under the self-building mode is less (greater) than that under the cooperation mode. We find that the cooperation mode is more beneficial to both consumers and a firm compared with the self-building mode when the consumer waiting cost is minor-to-moderate and the market potential of the cooperation mode is relatively high, which will improve social welfare due to the decrease in operational cost and product price. Finally, we consider a cooperative bargaining situation under the cooperation mode. We find that both the firm and the service platform will obtain more profits from the bargaining solution in a bilateral negotiation compared with the case of a dynamic game.

Keywords: Trade-in program; Dual channels; Self-building; Service platform; Bargaining (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10660-023-09746-w

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