A Dual-Channel Equilibrium Management Model for Service Products Under Electronic Commerce Environment

Abstract

With the development of electronic commerce, the online auction has been used as another basic sales channel in addition to the traditional list price. How to balance two channels to maximize the total expected profit under limited supply has drawn wide attention from both researchers and sellers. Faced with this issue, this paper proposes an equilibrium management model for dual-channel sales of the service products aiming to optimize the list price and the best setting of the auction scheme. First, we analyze the symmetric equilibrium participation strategy of rational consumers facing two channels. We model the consumer choice of channels through a threshold type function based on the consumer’s utility represented by a power exponential function, and then prove the unique existence of an auction-participation symmetric equilibrium, and demonstrate its monotone property in the customer’s valuation. Based on the strategy of consumers, from the perspective of sellers, an equilibrium management model is built to obtain the optimal choice of the auction quantity, auction duration, and the posted price. Finally, an airline example is used to verify the effectiveness of the proposed model. This work enables the seller to segment the market appropriately so that two channels reinforce each other and cannibalization is mitigated.

Keywords

• Dual-channel
• list price
• online auction
• service product
• symmetric equilibrium participation strategy