Impact of manufacturer entry and agency format on online channel structures

In the paper, we study the impact of manufacturer entry and agency format on the channel structure of online platforms. More precisely, we examine the strategic selling model decisions of two competing online platforms in the presence of a manufacturer’s entry and two agency formats, and further explore the interplay between the entry decisions and selling model strategies in both centralized and decentralized supply chains. With no entry, it is interesting to show that the symmetric reselling structure may constitute an equilibrium outcome in the platform’s agency model, yet it does not in the agency model. In the decentralized supply chain, the symmetric reselling structure will achieve optimal supply chain profits when the platforms’ selling cost differences are small. With entry, our analysis reveals that the optimal channel structure for supply chain members will appear only when the strong platform selects the reselling model in the platform’s agency model. In the centralized supply chain, manufacturer entry consistently proves more advantageous to the entire supply chain under the symmetric agency structure. In the decentralized supply chain, we find that under the asymmetric channel structures, entry will be more favorable only when the manufacturer’s selling cost is relatively low.