Supplier Encroachment, Information Sharing, and Channel Structure in Online Retail Platforms

Albert Y. HA, Huajiang LUO*, Weixin SHANG

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

2 Citations (Scopus)

Abstract

In this study, we develop a game-theoretic model to study the encroachment and information sharing decisions in a supply chain with a manufacturer selling through an online retail platform. In the base model, the manufacturer decides whether to encroach or not by selling through an agency channel, in addition to an existing reselling channel, at the same platform, who decides whether or not to share information with the manufacturer. We fully characterize the equilibrium decisions and show how they depend on the commission rate of the agency channel, channel substitutability, and information accuracy. Our analysis unfolds a novel wholesale price effect that extends related results in the literature. We also show that encroachment and information sharing are complementary, and therefore managers should not ignore the impact of one decision on the other decision even when the latter is not a primary motivation of the former. We study several model extensions to obtain additional insights and show that the major findings of the base model are robust and remain mostly valid when some modeling assumptions are changed.

Original languageEnglish
Pages (from-to)1235-1251
Number of pages17
JournalProduction and Operations Management
Volume31
Issue number3
Early online date1 Nov 2021
DOIs
Publication statusPublished - Mar 2022

Bibliographical note

Funding Information:
The authors sincerely thank the department editor, Jayashankar M. Swaminathan, the senior editor, and three anonymous reviewers for their constructive comments and suggestions that help improve the quality of the study. Albert Y. Ha was supported by Wei Lun Foundation and the Research Grants Council of Hong Kong [Project HKUST 16503519]. Huajiang Luo, the corresponding author, was supported by the Foundation of Southwest Jiaotong University (YJSY‐DSTD201918). Weixin Shang was supported by the Research Grants Council of Hong Kong [Project LU 13501415].

Publisher Copyright:
© 2021 Production and Operations Management Society

Keywords

  • supplier encroachment
  • channel structure
  • information sharing
  • online retailing

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