INTERPLAY BETWEEN ONLINE INTERMEDIARIES' INFORMATION SHARING AND MANUFACTURERS' SELLING FORMAT SELECTION

In practice, manufacturers sell products through online intermediaries (e.g., JD) that sell them to customers (reselling) or direct access to customers via intermediaries by paying a proportional fee (agency selling). Additionally, manufacturers can simultaneously employ reselling and agency selling, which we call hybrid selling. Motivated by practical examples in which these intermediaries possess superior demand information and choose whether to share it with their manufacturers, we develop a game-theoretic model to study the interplay between an intermediary's information-sharing and a manufacturer's selling format selection. When the information-sharing strategy is established before the selling format decision, it is always detrimental for the manufacturer to adopt the agency selling model. Specifically, the manufacturer should adopt the reselling (hybrid selling) model if the proportional fee is relatively large (small). Moreover, the intermediary should voluntarily share the information with the manufacturer if the fee is intermediate. When the information-sharing strategy is established after the selling format decision, the intermediary should not (should) disclose information, as the fee is relatively small (large) under the hybrid selling format. Additionally, the manufacturer could employ the agency selling (hybrid selling) model if the fee is sufficiently small and the competition intensity is relatively large (small).

Automated summary

In practice, manufacturers can sell products through intermediaries via reselling or agency selling, or employ a hybrid selling approach. We develop a game-theoretic model to study the impact of intermediary's information-sharing on a manufacturer's selling format selection. The results show that the manufacturer should adopt reselling (hybrid selling) if the proportional fee is relatively large (small) and the intermediary should voluntarily share information if the fee is intermediate.