Quality Assurance Competition Strategy under B2C Platform

Abstract

This paper examines the platform competition strategy in offering quality assurance policy based on two-sided B2C markets with buyers and sellers who trade through the B2C platform. We model this as a strategy decision whether control rights of quality assurance level are better held by the seller or by the platform. Whether the seller or the platform that provides quality assurance policy is preferred depends on their influence on network effects. We show that the seller and the platform have no strong intention to improve the quality assurance level in the monopoly markets. When all buyers multihome and all sellers single-home, sellers who hold the control rights of quality assurance are better than platforms. However, platforms that hold quality assurance drive more profits than sellers in the B2C markets where all buyers and all sellers multihome. Our findings connect platform competitive strategies to market and microfoundation of quality, which applies directly to managerial decisions in the B2C two-sided platform.