Monopolistic vs. Competitive Supply Chain Concerning Selection of the Platform Selling Mode in Three Power Structures

Abstract

This paper studies the selection of selling modes in a monopolistic and a competitive supply chain circumstance, where each supply chain comprises a supplier and an e-platform. The e-platform usually acts as a product reseller or serves as an online marketplace. The former is referred to as a reselling mode where the order fulfillment cost is paid by the supplier, and the latter is named as an agency selling mode where the platform pays for the order fulfillment cost. Motivated by the industrial cases, three power structures are utilized to capture the veridical market pricing. We find that the platform and the supplier’s selling mode strategies conflict in a great majority of cases, except for the region in which both the platform agency fee and the order fulfillment cost are moderate. The players can coordinate by Pareto improvement, and the improved result shows that the optimal selling modes are a reselling mode in the fierce competitive supply chain circumstance and agency selling mode in the monopolistic circumstance or the mild competitive circumstance. Surprisingly, adopting a reselling mode is not only a better choice than adopting an agency selling mode in the fierce competitive supply chain circumstance, but this makes the supply chain obtain more of a payoff than in the monopolistic circumstance. Furthermore, it is worth noting that each player choosing an agency selling mode will result in a “prisoner’s dilemma” in the competitive supply chain circumstance, where both players can obtain more payoffs with a reselling mode. In addition, the willingness of platforms and suppliers to play the role of “reseller” is the strongest under the ps structure and the weakest in the ss structure.