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How Should E-Commerce Platforms Subsidize Retailers with Logistics Constraints during an Epidemic Scenario? Considering Power Structure and Altruistic Preference

by 1,* and 2
1
School of Finance, Jiangxi Normal University, Nanchang 330022, China
2
School of Management, Nanchang University, Nanchang 330031, China
*
Author to whom correspondence should be addressed.
Academic Editor: Danny C.K. Ho
J. Theor. Appl. Electron. Commer. Res. 2021, 16(5), 1680-1701; https://doi.org/10.3390/jtaer16050095
Received: 8 April 2021 / Revised: 2 May 2021 / Accepted: 10 May 2021 / Published: 22 May 2021
To maintain the sustainable development of a platform’s economy, e-commerce platforms put forward various subsidy programs to retailers selling on them during COVID-19. This paper investigates an e-commerce platform’s decision on subsidizing a retailer selling on it with logistics constraints during an epidemic scenario, with a focus on the role of power structure and altruistic preference. By constructing two Stackelberg game models, the research obtains the optimal subsidy under two power structures (i.e., the dominant platform and the weaker platform), respectively. The comparison between them shows that the conditions of the dominant platform giving subsidies (both altruistic preference and logistics constraints should be higher enough) are stricter than the weaker platform. Considering the same altruistic preference and logistics constraints, the optimal subsidy provided by the weaker platform should always be not less than the dominant platform. However, the weaker platform, surprisingly, can get more utility by lowering its altruistic preference voluntarily when the commission fee is low. No matter what the power structure is, the optimal subsidy increases with the logistics service coefficient and altruistic preference, and the dominant member’s profit/utility is not less than the weaker one, which confirms “the first mover advantage”. Finally, more managerial implications to the platform-retailer systems are discussed. View Full-Text
Keywords: subsidies; e-commerce platforms; logistics constraints; power structure; altruistic preference subsidies; e-commerce platforms; logistics constraints; power structure; altruistic preference
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MDPI and ACS Style

Zhang, Y.; Xu, B. How Should E-Commerce Platforms Subsidize Retailers with Logistics Constraints during an Epidemic Scenario? Considering Power Structure and Altruistic Preference. J. Theor. Appl. Electron. Commer. Res. 2021, 16, 1680-1701. https://doi.org/10.3390/jtaer16050095

AMA Style

Zhang Y, Xu B. How Should E-Commerce Platforms Subsidize Retailers with Logistics Constraints during an Epidemic Scenario? Considering Power Structure and Altruistic Preference. Journal of Theoretical and Applied Electronic Commerce Research. 2021; 16(5):1680-1701. https://doi.org/10.3390/jtaer16050095

Chicago/Turabian Style

Zhang, Yang, and Bing Xu. 2021. "How Should E-Commerce Platforms Subsidize Retailers with Logistics Constraints during an Epidemic Scenario? Considering Power Structure and Altruistic Preference" Journal of Theoretical and Applied Electronic Commerce Research 16, no. 5: 1680-1701. https://doi.org/10.3390/jtaer16050095

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