563 / 2024-04-25 22:40:50

Store brand introduction and production mode selection in platform supply chains: A biform game analysis

Store brand, National brand, Production mode, Platform supply chain, Biform game

This paper considers a platform supply chain consisting of an e-market platform (EP) and a national brand (NB) manufacturer (NM). NM opens an agency selling channel on EP who endogenously determines whether to introduce a store brand (SB) to compete with NM. If EP introduces its SB, it has to select a production mode: in-house production, outsourcing to NM or a third-party manufacturer (TM). To account for both price competition in the sales stage and cooperation in the SB production stage, we propose four biform game models comprising the benchmark case without introducing SB (Model B), EP’s in-house production (Model I), co-production with NM (Model M), and co-production with TM (Model T). Analytical results show that: ① EP does not always have an incentive to introduce SB. When product substitutability is lower than a threshold, EP benefits from introducing SB. ② Product substitutability and manufacturing entry cost are two important factors affecting EP’s optimal SB production mode. When they are both at the low end, EP prefers to produce SB in house. Once the manufacturing entry cost is higher than a threshold or product substitutability is at the higher end, EP chooses to co-produce SB with TM. EP’s optimal strategy is to cooperate with NM under a higher manufacturing entry cost and the higher end of the lowest product substitutability. ③ EP’s SB introduction tends to benefit NM as well, but their interests are not always aligned. This interest divergence can be mitigated by a proper side payment.