Supplier encroachment through live-streaming: the role of channel structure and hybrid contract

Motivated by the growing prevalence of suppliers utilising online live-streaming channels to drive product sales and the increasing adoption of hybrid contracts, this study examines the dual role of supplier live-streaming encroachment (channel effect) and a hybrid contract (contractual effect) in facilitating supply chain coordination. We develop a Stackelberg game-theoretic model involving a supplier (leader) and a retailer (follower) where the retailer possesses precise market demand information, while the supplier only knows its probability distribution. The supplier may introduce an online live-streaming channel in addition to the traditional offline reselling channel to drive sales. The contractual framework employed between the supplier and retailer follows a hybrid structure that integrates both a nonlinear pricing menu and a revenue-sharing arrangement. Specifically, the supplier proposes a menu of contracts with wholesale prices and reselling quantities to screen the retailer's private demand information and the retailer sends a proportion of its retail revenue to the supplier. We derive the optimal menu of contracts and supply chain performance under different channel structures and contract frameworks, demonstrating that both the live-streaming encroachment and hybrid contract serve as effective mechanisms for supply chain coordination.