The Influence of Third-party E-Commerce Platform Price Limits on the Dual-Channel Strategy of Manufacturers
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Journal of Systems Science and Information  2019, Vol. 7 Issue (2): 173-186    DOI: 10.21078/JSSI-2019-173-14
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The Influence of Third-party E-Commerce Platform Price Limits on the Dual-Channel Strategy of Manufacturers
Cong WANG1, Huifang YANG1, Deli YANG2
1. Shipping Economics and Management College, Dalian Maritime University, Dalian 116024, China;
2. Faculty of Management and Economics, Dalian University of Technology, Dalian 116024, China
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Abstract 

Powerful platform operators always set price limits for sellers on the platform. This paper establishes Stackelberg game models according to two pricing models when the manufacturer enters the third-party e-commerce platform and sells products online. The first is a seller-pricing model in which the manufacturer decides the online price. The second is a platform-pricing model in which the platform decides the online price. We obtain the equilibrium results for these two models and the condition that allows the manufacturer to adopt the dual-channel strategy by comparing the operation decisions and performance of supply-chain members in the two models. Results show that the dual-channel strategy of the manufacturer always decreases the profit of the traditional retailer. In comparison with the sellerpricing model, the platform-pricing model always erodes parts of the manufacturers profit obtained by the dual-channel strategy. The manufacturer will pass on the partial loss to the retailer using relative leadership in the platform-pricing model, which renders the profit of the retailer lower than that in the seller-pricing model. Also, price limits do not always bring the platform more profits; sometimes the platform is forced to set a low price.

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Cong WANG
Huifang YANG
Deli YANG
Key wordsthird-party platform   price cap   the manufacturer   dual-channel strategy     
Received: 2018-09-18;
Fund:

Supported by National Natural Science Foundation of China (83118046); the Fundamental Research Funds for the Central Universities (3132018170, 3132018171); Social Science Foundation of Dalian (2017dlskyb024)

Cite this article:   
Cong WANG,Huifang YANG,Deli YANG. The Influence of Third-party E-Commerce Platform Price Limits on the Dual-Channel Strategy of Manufacturers[J]. Journal of Systems Science and Information, 2019, 7(2): 173-186.
URL:  
http://123.57.41.99/Jwk_si/EN/10.21078/JSSI-2019-173-14     or     http://123.57.41.99/Jwk_si/EN/Y2019/V7/I2/173
 
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