IDEAS home Printed from https://ideas.repec.org/a/bla/jemstr/v31y2022i2p259-283.html
   My bibliography  Save this article

Price competition online: Platforms versus branded websites

Author

Listed:
  • Oksana Loginova

Abstract

The focus of this theoretical study is price competition when some firms operate their own branded website while others sell their products through an online platform, such as Amazon Marketplace. On one hand, selling through Amazon expands a firm's reach to more customers, but on the other hand, starting a website can help the firm to increase the perceived value of its product, that is, to build brand equity. In the short run the composition of firms is fixed, whereas in the long run each firm chooses between Amazon and its own website. I derive the equilibrium prices and profits, analyze the firms' behavior in the long run, and compare the equilibrium outcome with the social optimum. Comparative statics analysis reveals some interesting results. For example, I find that the number of firms that choose Amazon may go down in response to an increase in the total number of firms. A pure‐strategy Nash equilibrium may not exist; I show that price dispersion among firms of the same type is more likely in less concentrated markets and/or when the increase in the perceived value of the product is relatively small.

Suggested Citation

  • Oksana Loginova, 2022. "Price competition online: Platforms versus branded websites," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(2), pages 259-283, April.
    • Handle: RePEc:bla:jemstr:v:31:y:2022:i:2:p:259-283
    DOI: 10.1111/jems.12461
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jems.12461
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jems.12461?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
    ---><---

    References listed on IDEAS

    as
    1. Caminal, Ramon & Claici, Adina, 2007. "Are loyalty-rewarding pricing schemes anti-competitive?," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 657-674, August.
    2. Tan, Kok-Keong & Yu, Jian & Yuan, Xian-Zhi, 1995. "Existence Theorems of Nash Equilibria for Non-cooperative N-Person Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 24(3), pages 217-222.
    3. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    4. Huw Dixon, 1987. "Approximate Bertrand Equilibria in a Replicated Industry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(1), pages 47-62.
    5. 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.
    6. Carlo Reggiani, 2014. "Spatial Price Discrimination in the Spokes Model," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 628-649, September.
    7. Tijs, S.H., 1981. "Nash equilibria for noncooperative n-person games in normal form," Other publications TiSEM 0af39700-5c65-4f49-bdc3-1, Tilburg University, School of Economics and Management.
    8. 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.
    9. Andrei Hagiu & Julian Wright, 2015. "Marketplace or Reseller?," Management Science, INFORMS, vol. 61(1), pages 184-203, January.
    10. Granero, Lluís M., 2019. "Strategic product variety and quality choice," Economics Letters, Elsevier, vol. 182(C), pages 10-14.
    Full references (including those not matched with items on IDEAS)

    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. Oksana Loginova, 2019. "Price Competition Online: Platforms vs. Branded Websites," Working Papers 1906, Department of Economics, University of Missouri.
    2. Begoña Casino & Lluís M. Granero, 2021. "Green products, market structure, and welfare," Journal of Economics, Springer, vol. 134(2), pages 103-125, October.
    3. Yongmin Chen & Xinyu Hua, 2017. "Competition, Product Safety, and Product Liability," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 33(2), pages 237-267.
    4. Andrea Mantovani & Claudio Piga & Carlo Reggiani, 2017. "The dynamics of online hotel prices and the EU Booking.com case," Working Papers 17-04, NET Institute.
    5. Fabio Dio & Luca Correani, 2020. "Quality-improving and cost-reducing strategic alliances," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(2), pages 493-524, July.
    6. Burak Dindaroglu, 2023. "Product design in monopolistic competition," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(3), pages 471-488, September.
    7. Junbin Wang & Xuan Gao & Zhiguo Wang, 2021. "Sustainable Supply Chain Decisions under E-Commerce Platform Marketplace with Competition," Sustainability, MDPI, vol. 13(8), pages 1-23, April.
    8. Siddhartha Sharma & Amit Mehra, 2021. "Entry of Platforms into Complementary Hardware Access Product Markets," Marketing Science, INFORMS, vol. 40(2), pages 325-343, March.
    9. Hsing Kenneth Cheng & Kyung Sung Jung & Young Kwark & Jingchuan Pu, 2023. "Impact of Own Brand Product Introduction on Optimal Pricing Models for Platform and Incumbent Sellers," Information Systems Research, INFORMS, vol. 34(3), pages 1131-1147, September.
    10. Loginova, Oksana, 2022. "Branded websites and marketplace selling: Competing during COVID-19," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 577-592.
    11. Zhou, Chi & Yu, Jing & Qian, Yong, 2024. "Should live-streaming platforms nonexclusively promote brands from traditional retail platforms?," Journal of Retailing and Consumer Services, Elsevier, vol. 80(C).
    12. Ramon Caminal, 2016. "Dynamic Product Diversity," Journal of Industrial Economics, Wiley Blackwell, vol. 64(1), pages 1-26, March.
    13. Weeds, Helen, 2012. "Superstars and the long tail: The impact of technology on market structure in media industries," Information Economics and Policy, Elsevier, vol. 24(1), pages 60-68.
    14. Rey, Patrick & Salant, David, 2012. "Abuse of dominance and licensing of intellectual property," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 518-527.
    15. Yongmin Chen & Scott J Savage, 2011. "The Effects of Competition on the Price for Cable Modem Internet Access," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 201-217, February.
    16. 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.
    17. Gielens, Katrijn & Steenkamp, Jan-Benedict E.M., 2019. "Branding in the era of digital (dis)intermediation," International Journal of Research in Marketing, Elsevier, vol. 36(3), pages 367-384.
    18. Suyuan Luo & Tsan‐Ming Choi, 2022. "E‐commerce supply chains with considerations of cyber‐security: Should governments play a role?," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 2107-2126, May.
    19. Alaei, Amir Mohammad & Taleizadeh, Ata Allah & Rabbani, Masoud, 2022. "Marketplace, reseller, or web-store channel: The impact of return policy and cross-channel spillover from marketplace to web-store," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    20. Germano, Fabrizio & Meier, Martin, 2013. "Concentration and self-censorship in commercial media," Journal of Public Economics, Elsevier, vol. 97(C), pages 117-130.

    More about this item

    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:bla:jemstr:v:31:y:2022:i:2:p:259-283. 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: Wiley Content Delivery (email available below). General contact details of provider: http://www.kellogg.northwestern.edu/research/journals/JEMS/ .

    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.