Merchant or Platform? The Business Model Selection Problem of an Online Intermediary

Ling-Chieh Kung, Ling-Chieh Kung and Wei-Chih Chen, Wei-Chih Chen (2017) Merchant or Platform? The Business Model Selection Problem of an Online Intermediary. Pacific Asia Conference on Information Systems (PACIS).

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Online intermediary plays an important role in e-commerce nowadays. Traditionally, it serves as a merchant buying goods from manufacturers and reselling them to consumer. With the development of technology, more and more intermediaries choose to become platforms referring consumers to sellers. It is critical for an intermediary to decide which model to adopt. To address this question, we establish a game-theoretic model with an intermediary and multiple manufacturers competing in selling heterogeneous products. Our analysis indicates that as the heterogeneity among products decreases, either at the production or the consumer side, the intermediary prefers the platform model to the merchant model. Nevertheless, if the products are highly similar, and thus the competition at the retail market is highly intense, the merchant model will be a better choice.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
T Technology > T Technology (General)
Divisions: Faculty of Industrial Engineering and Informatics > Information System
Depositing User: staff repository 1
Date Deposited: 23 Aug 2018 16:18
Last Modified: 23 Aug 2018 16:18

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