IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v203y2022icp577-592.html
   My bibliography  Save this article

Branded websites and marketplace selling: Competing during COVID-19

Author

Listed:
  • Loginova, Oksana

Abstract

I consider a market for differentiated products with an online marketplace (the platform) and two types of firms. Marketplace firms sell through the platform. Branded firms sell to consumers directly and, if they choose, through the platform. When a branded firm joins the platform, the firm expands its reach beyond its branded website/physical store(s) to consumers who visit the platform for all their purchases. The drawback is that the firm has to pay a referral fee for all sales on the platform, some of which are from its loyal consumers who would otherwise have purchased from the firm directly. I investigate the role of the firm composition in determining the equilibrium outcome. Interestingly, a higher fraction of branded firms translates into more firms on the platform and intense price competition. In the midst of the COVID-19 pandemic, consumers who used to shop at physical stores turn to the platform. I show that if they do (do not) consider other products, more (fewer) branded firms will join the platform in equilibrium.

Suggested Citation

  • Loginova, Oksana, 2022. "Branded websites and marketplace selling: Competing during COVID-19," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 577-592.
    • Handle: RePEc:eee:jeborg:v:203:y:2022:i:c:p:577-592
    DOI: 10.1016/j.jebo.2022.09.020
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268122003444
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2022.09.020?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Galeotti, Andrea & Moraga-González, José Luis, 2009. "Platform intermediation in a market for differentiated products," European Economic Review, Elsevier, vol. 53(4), pages 417-428, May.
    2. Chengsi Wang & Julian Wright, 2020. "Search platforms: showrooming and price parity clauses," RAND Journal of Economics, RAND Corporation, vol. 51(1), pages 32-58, March.
    3. Germain Gaudin & Alexander White, 2021. "Vertical Agreements and User Access," American Economic Journal: Microeconomics, American Economic Association, vol. 13(3), pages 328-371, August.
    4. Vibhanshu Abhishek & Kinshuk Jerath & Z. John Zhang, 2016. "Agency Selling or Reselling? Channel Structures in Electronic Retailing," Management Science, INFORMS, vol. 62(8), pages 2259-2280, August.
    5. Andrei Hagiu & Bruno Jullien & Julian Wright, 2020. "Creating Platforms by Hosting Rivals," Management Science, INFORMS, vol. 66(7), pages 3234-3248, July.
    6. Kirk, Colleen P. & Rifkin, Laura S., 2020. "I'll trade you diamonds for toilet paper: Consumer reacting, coping and adapting behaviors in the COVID-19 pandemic," Journal of Business Research, Elsevier, vol. 117(C), pages 124-131.
    7. Andrei Hagiu & Bruno Jullien & Julian Wright, 2020. "Creating Platforms by Hosting Rivals," Management Science, INFORMS, vol. 66(7), pages 3234-3248, July.
    8. Andrei Hagiu & Julian Wright, 2015. "Marketplace or Reseller?," Management Science, INFORMS, vol. 61(1), pages 184-203, January.
    9. Hagiu, Andrei & Jullien, Bruno & Wright, Julian, 2018. "Creating platforms by hosting rivals," TSE Working Papers 18-970, Toulouse School of Economics (TSE), revised Mar 2019.
    10. Prokopis K. Theodoridis & Androniki Kavoura, 2021. "The Impact of COVID-19 on Consumer Behaviour: The Case of Greece," Springer Proceedings in Business and Economics, in: Androniki Kavoura & Stephen J. Havlovic & Natalya Totskaya (ed.), Strategic Innovative Marketing and Tourism in the COVID-19 Era, pages 11-18, Springer.
    11. Galeotti, Andrea & Moraga-González, José Luis, 2009. "Platform intermediation in a market for differentiated products," European Economic Review, Elsevier, vol. 53(4), pages 417-428, May.
    12. Justin P. Johnson, 2017. "The Agency Model and MFN Clauses," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(3), pages 1151-1185.
    13. Joan Calzada & Ester Manna & Andrea Mantovani, 2022. "Platform price parity clauses and market segmentation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 609-637, August.
    14. Gans, Joshua S., 2012. "Mobile application pricing," Information Economics and Policy, Elsevier, vol. 24(1), pages 52-59.
    15. Andrei Hagiu & Tat‐How Teh & Julian Wright, 2022. "Should platforms be allowed to sell on their own marketplaces?," RAND Journal of Economics, RAND Corporation, vol. 53(2), pages 297-327, June.
    16. Yongmin Chen & Michael H. Riordan, 2007. "Price and Variety in the Spokes Model," Economic Journal, Royal Economic Society, vol. 117(522), pages 897-921, July.
    17. Pantano, Eleonora & Pizzi, Gabriele & Scarpi, Daniele & Dennis, Charles, 2020. "Competing during a pandemic? Retailers’ ups and downs during the COVID-19 outbreak," Journal of Business Research, Elsevier, vol. 116(C), pages 209-213.
    18. Benny Mantin & Harish Krishnan & Tirtha Dhar, 2014. "The Strategic Role of Third-Party Marketplaces in Retailing," Production and Operations Management, Production and Operations Management Society, vol. 23(11), pages 1937-1949, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shuilin Liu & Xudong Lin & Xiaoli Huang & Hanyang Luo & Sumin Yu, 2023. "Research on Service-Driven Benign Market with Platform Subsidy Strategy," Mathematics, MDPI, vol. 11(2), pages 1-21, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Esther Gal-Or & Qiaoni Shi, 2022. "Designing Entry Strategies for Subscription Platforms," Management Science, INFORMS, vol. 68(10), pages 7597-7613, October.
    2. Andrei Hagiu & Tat‐How Teh & Julian Wright, 2022. "Should platforms be allowed to sell on their own marketplaces?," RAND Journal of Economics, RAND Corporation, vol. 53(2), pages 297-327, June.
    3. Carlotta Mariotto & Marianne Verdier, 2020. "Platform–merchant competition for sales services," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(4), pages 834-853, October.
    4. Federico Etro, 2021. "Product selection in online marketplaces," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(3), pages 614-637, August.
    5. Anderson, Simon & Bedre-Defolie, Özlem, 2022. "Online trade platforms: Hosting, selling, or both?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 84, pages 1-15.
    6. Maruyama, Masayoshi & Zennyo, Yusuke, 2020. "Platform most-favored-customer clauses and investment incentives," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    7. Federico Etro, 2023. "e-Commerce Platforms and Self-preferencing," Working Papers - Economics wp2023_07.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    8. Hervas-Drane, Andres & Shelegia, Sandro, 2022. "Price competition with a stake in your rival," International Journal of Industrial Organization, Elsevier, vol. 84(C).
    9. Rong, Jianxin & Wang, Dazhong, 2023. "Contracting in hierarchical platforms," Economics Letters, Elsevier, vol. 226(C).
    10. Cao, Kaiying & Xu, Yuqiu & Hua, Ye & Choi, Tsan-Ming, 2023. "Supplier or co-optor: Optimal channel and logistics selection problems on retail platforms," European Journal of Operational Research, Elsevier, vol. 311(3), pages 971-988.
    11. Markus Reisinger & Jens Schmidt & Nils Stieglitz, 2021. "How Complementors Benefit from Taking Competition to the System Level," Management Science, INFORMS, vol. 67(8), pages 5106-5123, August.
    12. Mark J. Tremblay, 2020. "The Limits of Marketplace Fee Discrimination," Working Papers 20-10, NET Institute.
    13. Wei, Yuansheng & Dong, Yuxuan, 2022. "Product distribution strategy in response to the platform retailer's marketplace introduction," European Journal of Operational Research, Elsevier, vol. 303(2), pages 986-996.
    14. Qiao, Haike & Su, Qin, 2021. "Distribution channel and licensing strategy choice considering consumer online reviews in a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    15. Oksana Loginova & Andrea Mantovani, 2019. "Price competition in the presence of a web aggregator," Journal of Economics, Springer, vol. 126(1), pages 43-73, January.
    16. Rabassa, Valérie & Sabri, Ouidade & Spaletta, Claire, 2022. "Conversational commerce: Do biased choices offered by voice assistants’ technology constrain its appropriation?," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    17. Mantovani, Andrea & Reggiani, Carlo & Broocks, Annette & Duch-Brown, Nestor & Ma, Peiyao, 2022. "The Price Effects of Banning Price Parity Clauses in the EU: Evidence from International Hotel Groups," TSE Working Papers 22-1371, Toulouse School of Economics (TSE).
    18. Lam, Wing Man Wynne & Liu, Xingyi, 2023. "Dancing with rivals: How does platform’s information usage benefit independent sellers?," European Journal of Operational Research, Elsevier, vol. 309(1), pages 421-431.
    19. Shen, Bo & Wright, Julian, 2019. "Why (don’t) firms free ride on an intermediary’s advice?," International Journal of Industrial Organization, Elsevier, vol. 64(C), pages 27-54.
    20. Padilla, Jorge & Piccolo, Salvatore & Vasconcelos, Helder, 2021. "Should vertically integrated platforms be mandated to share information with their rivals?," Economics Letters, Elsevier, vol. 203(C).

    More about this item

    Keywords

    Price competition; Online marketplace platform; Brands; Consumer shopping behavior; COVID-19;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:203:y:2022:i:c:p:577-592. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.