To share or not to share : strategic information sharing with store brand encroachment in platform markets

Abstract

This paper investigates whether the online retail platform should adopt store brand (SB) encroachment and information sharing strategies, and how these decisions hinge on the firm characteristics and market conditions. Our research shows that the information sharing helps induce the SB encroachment in the reselling mode but contributes to deterring it in the agency selling mode. Furthermore, the platform’s information sharing decision is quite different under the two selling modes. Specifically, when the SB’s fixed encroachment cost is high or low, the platform prefers to retain information in the reselling mode; whereas, information sharing is preferred in the agency selling mode unless both the fixed introduction cost and the commission fee are relatively low. Interestingly, when the fixed encroachment cost is intermediate, the SB encroachment may reverse the platform’s information sharing preferences, that is, the platform is inclined to disclose information in the reselling mode but not in the agency selling mode. Furthermore, information sharing may harm both the manufacturer and the platform.