The Incentive to Join in Customer-to-Manufacturer (C2M) Mode: Competition and Quality Differentiation
Liu Yang (),
Baozhen Shi () and
Yinan Qi
Additional contact information
Liu Yang: Business School, University of International Business and Economics, Chaoyang District, Beijing 100029, P. R. China
Baozhen Shi: Business School, University of International Business and Economics, Chaoyang District, Beijing 100029, P. R. China
Yinan Qi: Business School, University of International Business and Economics, Chaoyang District, Beijing 100029, P. R. China
Asia-Pacific Journal of Operational Research (APJOR), 2024, vol. 41, issue 04, 1-25
Abstract:
Customer-to-Manufacturer (C2M) is an emerging business mode in which the platform analyzes customers’ information and provides suggestions to manufacturers so that the manufacturers can understand customers’ needs much better. This paper investigates C2M by considering two competing firms that sell products to customers through an e-commerce platform. One produces high-quality products (firm H), and the other produces low-quality products (firm L). The platform sells a product improvement report to the firms, each firm decides whether or not to buy the report and join in C2M mode. The study results show that buying the product improvement report gives each firm the privilege of setting a higher product price. However, such privileges are weakened when both firms buy the reports. When the report price is small, the Nash equilibrium solution is that both firms buy the product improvement report, although it is not individually optimal for each firm. It indicates that the report price influences the firms’ profits and incentive to engage in C2M mode and one firm’s purchasing decision affects the other. Interestingly, we find that a moderate report price may make firm H worse off but benefit firm L. It indicates that the C2M mode is not always appealing to firms.
Keywords: Customer-to-manufacturer (C2M); quality differentiation; competition; e-commerce platform; business model innovation (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:
Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0217595924400050
Access to full text is restricted to subscribers
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:wsi:apjorx:v:41:y:2024:i:04:n:s0217595924400050
Ordering information: This journal article can be ordered from
DOI: 10.1142/S0217595924400050
Access Statistics for this article
Asia-Pacific Journal of Operational Research (APJOR) is currently edited by Gongyun Zhao
More articles in Asia-Pacific Journal of Operational Research (APJOR) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().