Optimal financing and commission policies for e-commerce platforms with vendor external alternatives

E-commerce platforms (EPs) provide financing to capital-constrained vendors, stimulating inventory expansion and thereby boosting commission revenue. We term this self-reinforcing mechanism the Augmentation Effect on Commission Revenue (AECR). We develop a Stackelberg game model between an EP and a vendor, incorporating reservation profit and external financing options (EFOs), to examine how EPs leverage the AECR to maximize profit amid vendor external alternatives. Within this unified framework, we analyze two contractual scenarios—exogenous versus endogenous commission rates—and establish the existence and uniqueness of their equilibria under standard assumptions. Our results show that a higher commission rate strengthens the AECR, prompting the EP to reduce the interest rate, potentially to zero. Endogenizing the commission rate enhances strategic flexibility and can foster system-wide efficiency. Crucially, the EP’s profit-maximizing strategy coincides with supply chain optimization if and only if the vendor’s reservation profit lies within a specific interval determined by its capital position. In pursuing higher profit, the EP tends to raise the commission rate while lowering the interest rate, leveraging the AECR to drive overall profit growth. Furthermore, EFOs constrain platform decisions only when the AECR is weak—a scenario triggered under exogenous settings by low vendor reservation profit coupled with a small commission rate, but under endogenous settings by high reservation profit, which endogenously depresses the commission rate. These findings offer actionable insights for EPs’ design of financial and commission policies and guide vendors in securing favorable terms by strengthening their external alternatives.