Social influence and channel competition in the live-streaming market

We study the impacts of social influence on the stakeholders in the live-streaming market by considering a one-to-two channel in which a common manufacturer sells products via two heterogeneous influencers who may compete for sales. In such a market, consumer purchase decisions depend not only on their intrinsic preferences but also on their social utilities. We adopt a multiunit bilateral bargaining framework to investigate parallel negotiations between the manufacturer and each influencer and determine a rational expectations equilibrium. Our analysis shows that as the social influence level increases, the stronger influencer gradually cannibalizes the weaker influencer’s market share. Moreover, the stronger influencer’s profit is always enhanced from live streaming due to the social influence but the weaker influencer’s profit may not. The results highlight that the social influence combined with channel competition results in the so-called Matthew effect, which describes the phenomenon that the rich get richer while the poor get poorer in societies. Besides, as the social influence level increases, the manufacturer should switch from cooperating with both influencers to cooperating with the stronger one. In addition, whether the manufacturer’s profit is enhanced from live streaming depends on influencers’ intrinsic differences, social influence levels and the relative value of influencers’ bargaining power. Finally, we find that even if the prices of the product sold by influencers are higher than those sold without social influence, consumer surplus is always enhanced from live streaming.