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

This study examines the interaction between an intermediary's information sharing and a manufacturer's selling format selection, finding that the manufacturer should choose different selling models based on the fee and competition intensity, while the intermediary's information-sharing behavior is influenced by the fee and selling format decision.