E-tailer's supply chain structures in group buying: Monopolistic or competitive retailing?. Issue 4 (2nd October 2021)

• Record Type: Journal Article
• Authors: Sun, Shuxing; Zhang, Bin; Huang, Yiting
• Is Part Of: International journal of electronic commerce. Volume 25:Issue 4(2021)
• Page Start: 497
• Page End: 514
• Publication Date: 2021-10-02
• Subjects: Supply chain structure -- group buying -- monopolistic retailing -- competitive retailing -- game theory -- e-retail -- online pricing; Electronic commerce -- Periodicals; Electronic commerce; Periodicals; Electronic journals; 381.14205
• DOI: 10.1080/10864415.2021.1967006
• Languages: English
• ISSNs: 1086-4415

Abstract

ABSTRACT: We investigate the design of online group buying considering consumer characteristics under two different supply chain structures. Under monopolistic retailing, the e-tailer sells products through individual buying and group buying options simultaneously. Under competitive retailing, two e-tailers sell products through individual buying and group buying options respectively. We employ a stylized game-theoretical model to investigate equilibrium pricing and group size threshold decisions under two supply chain structures, and characterize the e-tailer's optimal supply chain structure as well as study its impacts on the manufacturer and consumers. We show that the e-tailer always prefers a relatively high (high or low) group size threshold in the monopolistic (competitive) supply chain. Moreover, we find that the e-tailer chooses the monopolistic or competitive supply chain structure depending on combined parameters. Consequently, the e-tailer's optimal supply chain structure may lead to an all-win or all-loss situation for the manufacturer and consumers. Our results underscore the importance in pricing and threshold decisions for online group buying and provide managerial insights for the group buying industry.