Multi-Category Innovation and Encroachment Strategy Evolution of Composite E-Commerce Platform Based on Multi-Agent Simulation

Abstract

An in-depth study of the product encroachment behavior on the composite e-commerce platform is of great significance to standardize the platform economy. This paper studies product encroachment behavior of composite e-commerce platforms with double-differentiated multi-product competition and constructs a game model of product innovation by an independent seller and product encroachment by the platform owner. Using multi-agent simulation, we simulate the bounded rational decision-making and interaction process of multiple agents in multiple periods and analyze the main parameters’ influence. Results indicate the following: (1) In dual-differentiated multi-product competition, the third-party seller is more willing to invest in innovating high-quality category P, and the profit-driven platform owner only encroaches on the new variants of category P. (2) The larger consumers’ platform owner preference can encourage the third-party seller to innovate high-quality new products. The increase in vertical differentiation of categories can enhance the third-party seller’s innovation motivation for the traffic-attracting category. (3) A reasonable commission rate set by the platform owner can ensure the variety of variants of various categories, thereby expanding the sales scope of the composite e-commerce platform. Diseconomies of scale of category diversity management costs hinder the growth of product variety in the online marketplace.