Manufacturer live-streaming channel strategy with retailer consumer surplus concern

The boom of live-streaming commerce prompts many manufacturers with existing traditional online (T) channels to establish emerging live-streaming (L) channels. However, the retailer’s concern for consumer surplus (CS) complicates supply chain decisions. A game-theoretic model is developed to examine the manufacturer’s L channel establishment strategy and associated supply chain performance when facing either a profit-oriented or a CS-concerned retailer. First, we find that live-streaming power and the L channel establishment cost determine whether the manufacturer establishes the L channel and which strategy it adopts among parity establishment, unrestricted establishment, and threatening establishment. Second, although the L channel may cannibalise the T channel’s market share, its establishment can, counterintuitively, increase the retailer’s profit under specific conditions. Intuitively, the establishment of the L channel increases CS. Third, under certain conditions, the retailer’s CS concern increases its own profit and the manufacturer’s profit. Contrary to conventional wisdom, however, we show that when L channel establishment costs are moderate, CS concern can reduce CS. This occurs because CS concern discourages L channel establishment and reshapes pricing decisions, thereby affecting manufacturer profit, retailer profit, and CS in different conditions. Finally, we verify robustness by extending the model to partially alleviated purchase uncertainty.