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3899. Channel Structure of Online Retail Platforms: Impact of Asymmetric Information and Capacity Constraints
Invited abstract in session WD-61: Online, Omnichannel, and Pricing, stream Retail Operations.
Wednesday, 14:30-16:00Room: S10 (building: 101)
Authors (first author is the speaker)
| 1. | Hasan Shorakaei
|
| Business Administration, Ivey Business School | |
| 2. | Mehmet Begen
|
| Ivey Business School, Western University | |
| 3. | Hubert Pun
|
| Ivey Business School |
Abstract
Problem definition: When selling online, manufacturers can either sell directly to customers through the platform (agency channel), sell their products to the platform (reselling channel), or engage in both channels simultaneously. Manufacturers typically operate with limited production capacity, and this information is often not disclosed to online platforms.
Methodology/results: Our study develops a screening game framework where the manufacturer has private information about its capacity, and the online platform presents a menu of quantity-price pairs contracts to the manufacturer. The manufacturer then determines the quantity allocated to the reselling channel and to the agency channel. Our finding highlights that the manufacturer is more likely to use both (agency and reselling) channels under the asymmetric information game. We also show that a manufacturer with high capacity benefits from keeping its capacity information private, but a manufacturer with low capacity does not. Furthermore, the platform and the manufacturer may not benefit from the manufacturer having more production capacity. Lastly, we find that if the manufacturer’s capacity is sufficiently small, then the platform may be better off not knowing the manufacturer's capacity.
Managerial implications: Our study offers insights and guidance for manufacturers and online platforms, assisting them in making strategic decisions and navigating the dynamics of information sharing within the online retail.
Keywords
- Supply Chain Management
- Game Theory
- Capacity Planning
Status: accepted
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