Economic and Environmental Implications of Introducing Green Own-Brand Products on E-Commerce Platforms

Abstract

This paper examines the impact of introducing a green own-brand product on an e-commerce platform, the incumbent competing sellers, and the environment. We develop a stylized model wherein a green seller and a non-green seller directly sell products to consumers through an e-commerce platform. The platform has the option to introduce its own-brand product and sell it within its marketplace. In scenarios where no brand introduction occurs, only two incumbents compete in the marketplace. However, with the introduction of the platform’s own brand, three products compete in the marketplace. Our findings reveal several noteworthy results. Firstly, the introduction of the platform’s own brand may diminish its profit, even when there are no development costs associated with the brand. Particularly intriguing is the observation that the platform’s profit may decrease as the product greenness of its own brand increases. Secondly, under certain conditions, both incumbent sellers can experience improved outcomes with the introduction of the platform’s green brand. Thirdly, while the platform’s green brand introduction does not invariably enhance the supply chain’s environmental performance, it may diminish it in instances where the base demand for the platform’s own brand is substantial and the eco-friendliness of the brand falls within a mid-range spectrum.