Reselling/Agency Selling and Online Intermediaries’ Information Sharing With Manufacturers and Resellers

Abstract

Manufacturers and  their resellers generally employ online intermediaries to sell their products. These intermediaries often possess superior demand information and decide whether to share it with their sellers. In practice, the manufacturers can employ two possible selling formats: reselling ([Formula: see text]), under which they sell the products to the intermediaries who subsequently resell to customers and agency selling ([Formula: see text]), under which they sell the products to customers through the intermediaries by paying a proportional fee. Additionally, the manufacturers can also sell the products to their resellers who subsequently resell to customers through the intermediaries. We develop a game-theoretic model to investigate an e-commerce supply chain in which an online intermediary first decides whether to disclose information option to a manufacturer and/or reseller; thereafter, the manufacturer selects between the [Formula: see text] or [Formula: see text] format. Regardless of the information-sharing decision made by the intermediary, the manufacturer’s selling format selection remains qualitatively unchanged. However, the intermediary can compel the manufacturer to change his selling format by sharing information with only the manufacturer or reseller in certain market environments. When the intensity is small but the proportional fee is intermediate, the intermediary should share information with only the manufacturer to compel him to change his selling format choice from [Formula: see text] to [Formula: see text]. When both the intensity and fee are intermediate, the intermediary should share information exclusively with the manufacturer (or reseller) to prompt a change in the manufacturer’s selling format, switching from [Formula: see text] to [Formula: see text] (or from [Formula: see text] to [Formula: see text]), contingent upon whether the magnitude of demand fluctuation is small or large.