Manufacturer Encroachment Strategic Analysis with Platform Service Inputs: An Agent-Based Scenario

Abstract

This paper considers the agency selling channel in a supply chain under platform service investment. We construct Stackelberg game models to study the impact of the manufacturer’s encroachment strategy on supply chain members. Research results indicate that the encroachment strategy always has a positive impact at the levels of the manufacturer and platform service, which should dynamically change in response to the manufacturer’s action; the platform may actively implement a service strategy without encroachment, while the platform should be cautious in providing services to avoid backlash when encroachment occurs; the high commission rate may prompt the platform to increase the service effort and hinder manufacturer encroachment; when the channel substitution rate is high, both the manufacturer and platform may suffer from it and hence they should slow down their strategy implementation and consider cooperation; when the elasticity coefficient is large and the service cost is high, it may hinder the platform from providing services and the manufacturer may take the opportunity to encroach and thus seize the market.

Keywords

• manufacturer encroachment
• platform service
• agency selling
• Stackelberg game