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Chinese Journal of Management Science ›› 2025, Vol. 33 ›› Issue (9): 269-279.doi: 10.16381/j.cnki.issn1003-207x.2022.2030

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Platform Pricing Strategies and Mode Selection of Retailers Facing Potential CompetitorsHeterogeneous Product Introduction

Zonghuo Li, Shanliang Li(), Liwen Liu   

  1. School of Politics and Public Administration,Soochow University,Suzhou 215123,China
  • Received:2022-09-15 Revised:2023-01-06 Online:2025-09-25 Published:2025-09-29
  • Contact: Shanliang Li E-mail:lisl@suda.edu.cn

Abstract:

With the rapid development of the platform economy, more and more retailers rely on online platforms to sell products. In turn, online platforms allow retailers to enter the market by charginga commission fee. In the process of cooperation between retailers and the online platform, potential competitive retailers invade the platform retail system with products of different quality. This has led to fierce channel and product competition.A platform retail system where an incumbent retailer and an online platform reach a contract is studied based on a commission fee. A potential competitive retailer enters the system through direct sales mode, wholesale mode, and hybrid mode with heterogeneous products. The game theory is adopted to analyze the impact of quality differences and introduction modes on the operational decision of the platform retail system. The optimal pricing strategy and mode selection of the game players are extracted. The result shows that product introduction does not necessarily reduce the profit of the incumbent retailer and platform. Rather, the incumbent retailer derives a higher profit when the product quality and commission fee are low; and the platform derives more profit when the product quality is low and the commission fee is large. The result also indicates that the incumbent retailer should resist a low-quality product introduction through wholesale mode when the commission fee is large; while it should resist a high-quality product introduction through hybrid mode. The platform should adopt a hybrid mode to resist a high-quality product introduction under a high commission fee. Interestingly, even if the commission fee is low, the platform will still choose the direct sales mode to resist a low-quality product introduction.The results of this paper can provide theoretical suggestions for the pricing strategy of the platform retail system. Meanwhile, it provides decision-making reference for cooperation mode selection and benefit distribution between online platforms (such as Amazon.com and JD.com) and upstream retailers.

Key words: platform retail system, potential competitive retailer, heterogeneous product introduction, mode selection

CLC Number: