322 / 2024-04-24 13:33:45

Platform-Induced Category Encroachment: Impact on Manufacturer’s Quality Disclosure

Supply chain management; Category encroachment; Quality disclosure; Distribution contract

The rapid evolution of the platform economy has given rise to an abundance of product categories on diverse e-commerce platforms, each establishing its own distinct brands. This phenomenon adds intri cacy to product information, presenting challenges for consumers seeking accurate details about product quality. This paper explores the dynamic interplay between the platform owner's category expansion and the manufacturer's quality disclosure within a supply chain. Our study focuses on the platform owner’s category expansion strategy, examining its impact under two prevalent distribution contracts: reselling and agency selling. To analyze this, we propose four distinct models: the RN model (Reselling-No entry), the RE model (Reselling-Entry), the AN model (Agency selling-No entry), and the AE model (Agency selling-Entry). This research uncovers a noteworthy insight—platform owner-led category expansion ex erts a negative influence on the manufacturer's inclination to disclose information about product quality. We observe a free-rider effect on quality information disclosure by the platform owner, underscoring the idea that enhanced transparency in product quality information primarily benefits the platform owner. Notably, our findings reveal specific scenarios that create opportunities for a mutually beneficial outcome, fostering a win-win situation between the manufacturer and the platform. This research contributes to understanding the intricate dynamics between platform-induced category encroachment and the disclosure of product quality information, offering valuable insights for both academia and industry practitioners.