Manufacturer encroachment with a new product under network externalities

Yang, Jiaquan; Li, Kevin; Huang, Jun

doi:10.1016/j.ijpe.2023.108954

Cited by 12 publications

(6 citation statements)

References 54 publications

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“…Under cost subsidy strategies, the consumer surplus for both types of products increases. In contrast to the conclusions of the existing literature, it is noticeable that when supply chain encroachment is not considered, the existing literature generally indicates that subsidies, whether internal to the supply chain [66] or government-sponsored [22], lead to an enhancement of the consumer surplus.…”

Section: Government Subsidizes the Cost Of The Supplier's Innovation ...contrasting

confidence: 63%

“…However, as market competition relationships become increasingly intricate, the issue of supply chain encroachment extends beyond mere competition among different channels for the same product. Larger retailers, platforms, or suppliers also produce substitute products and distribute them across various channels [6,21,22]. Presently, there are few studies that specifically analyze the issue of supply chain encroachment through competitive products, although they do exist [23].…”

Section: Literature Reviewmentioning

confidence: 99%

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Deciphering the Innovation Subsidy Puzzle: Government Choices amid Supply Chain Encroachment

Wang,

Yuan

2023

Mathematics

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Although the impact of government subsidies on private innovation has been widely recognized and researched in numerous studies, few have considered the increasingly prevalent phenomenon of supply chain encroachment in their analysis. This paper explores this phenomenon through a game-theoretic model that takes into account a government entity, a supplier, and a manufacturer. The primary aim is to understand how the government can make optimal subsidy decisions when the supplier moves into the supply chain. Several interesting conclusions have been drawn: (1) under governmental innovation subsidies, the supplier will raise the price of the new technology to obtain more potential revenue, which is termed the inverse wholesale price effect; (2) different kinds of innovation subsidies are shown to have varied effects on R&D, production, and consumption behavior; and (3) different subsidy strategies are made compatible with the characteristics of innovative activities to maximize social welfare as much as possible. These findings shed light on inconsistent results surrounding the impacts of government subsidies on private innovations in the existing literature, providing municipalities with helpful guidance when encouraging private innovation initiatives amid supply chain encroachment.

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Section: Government Subsidizes the Cost Of The Supplier's Innovation ...contrasting

confidence: 63%

Section: Literature Reviewmentioning

confidence: 99%

Deciphering the Innovation Subsidy Puzzle: Government Choices amid Supply Chain Encroachment

Wang,

Yuan

2023

Mathematics

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“…Manufacturers may sell the same products in the live streaming channel as the resale channel of e-commerce platforms, that is, they may not implement differentiation strategies. Alternatively, they may sell low-quality products to increase demand for the live streaming channel by attracting traffic with low quality and low price, which is common in practice (Ji et al, 2022;Yang et al, 2023).…”

Section: The Modelmentioning

confidence: 99%

Manufacturer's channel strategy in live streaming E‐commerce supply chain

Ma,

Yang

2024

Manage Decis Econ

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This study investigates the manufacturer's live streaming sales strategy. Considering the vertical differences in products, we build a live streaming sales model for an e‐commerce supply chain. We examined different live streaming channel strategies for the manufacturer, with the base strategy being no live streaming sales and the manufacturer only reselling a high‐quality product on the e‐commerce platform. The manufacturer's strategies for choosing live streaming include selling a high‐ or low‐quality product on independent and e‐commerce platform channels. We solve the solutions under different scenarios, comparing the equilibrium solutions and discussing the impact of live streaming under different channel models. We find that live streaming channel encroachment by the manufacturer can achieve a win–win situation for both the manufacturer and e‐commerce platform, and the encroachment of a low‐quality product can achieve a larger win–win situation. In the independent live streaming channel, the manufacturer chooses to sell a high‐quality product under the quality and cost advantages. In the e‐commerce platform's live streaming channel, the presence of commissions further influences the manufacturer's strategy. In the extended model, we analyze the spillover effect of live streaming sales. A multi‐agent‐based simulation model is developed to validate the conclusions of the main model.

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“…Recently, Niu et al (2023) centered their study on livestream e-commerce, analyzing the impact of network externalities stemming from KOL's opinions on marketing investment. Yang et al (2023c) examined the impact of network externality on manufacturers' R&D investment and the introduction of new products, highlighting that a rise in network externalities might reduce manufacturer profitability. Meanwhile, Shen et al (2023) investigated pricing and advertising decisions within the online direct sales model, indicating that network externalities are conducive to the development of e-commerce enterprises.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Consequently, consumers' purchasing decisions are shaped not only by the inherent value of the product but also by the collective value arising from the size of the user base and the potency of network externalities (Yi and Yang, 2017). Network externalities are commonly acknowledged in the realm of value-added services, and existing studies underscore that the convenience of online channels induces herd behavior among consumers (Yang et al, 2023c;Niu et al, 2023;Li and Wu, 2024). When consumers opt for the trade-in program, they benefit from the recycling service offered by online platforms.…”

Section: Introductionmentioning

confidence: 99%

Trade-in program in online platforms considering network externalities and recycling services

Yu,

Li,

2024

Preprint

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Consumers trade their used products for new ones through online platforms, thereby integrating internet shopping and recycling. Two trade-in models are developed, i.e., the platform model where the manufacturer cooperates with an online retail platform to sell products and the online retail platform introduces trade-in program and manufacturer model where the manufacturer's own platform introduces trade-in program. This study examines the trade-in program offered by online platforms with a consideration of network externalities and heterogeneous consumers, and analyzes the decisions of pricing and recycling service. The research indicates that heightened network externalities can enhance recycling services, promote trade-in program development, and increase the demand for trade-in. The trade-in recycling service gets higher in the manufacturer model, whereas the sales price in the platform model is elevated due to sales commission rates. However, the manufacturer model does not always have higher market demand than the platform model, when both the commission rate and recycling revenue are high, the platform model have higher market demand. Although the manufacturer profits more than the online retail platform in the platform model, it is suggested that the manufacturer should introduce the trade-in program on the self-owned platform since the profit of manufacturer is larger under the manufacturer model.

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Manufacturer encroachment with a new product under network externalities

Cited by 12 publications

References 54 publications

Deciphering the Innovation Subsidy Puzzle: Government Choices amid Supply Chain Encroachment

Deciphering the Innovation Subsidy Puzzle: Government Choices amid Supply Chain Encroachment

Manufacturer's channel strategy in live streaming E‐commerce supply chain

Trade-in program in online platforms considering network externalities and recycling services

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