Multistage Supply Chain Channel Principal-Agent Model in the Context of e-Commerce With Fairness Preference

Abstract

This research aims to investigate information asymmetry in e-commerce supply chain channels and the impact of the fair preference model on the behavior and returns of channel members. Therefore, by contrasting it with the model in the completely rational case, this research establishes a more realistic principal-agent model and incorporates the fair preference model into the e-commerce supply chain channel. According to the model’s analysis, the effort level of the retailer at each stage is positively correlated with the e-commerce efficiency coefficient, and the incentive coefficient of manufacturers is positively correlated with the e-commerce efficiency coefficient in the case where all rationality is assumed. Manufacturing companies’ anticipated profits are positively correlated with the e-commerce efficiency coefficient. According to the fair preference model, retailers will put forth more effort to sell products when their fixed income from manufacturers is higher and their optimal effort level is positively correlated with that income. When e-commerce’s efficiency coefficient is higher than 1, the retailer’s revenue and effort exceeded those of traditional channels. Manufacturers and retailers both experience Pareto improvements in their earnings after the fair preference model is introduced.