Online Retailing Promotion Strategy under Platform Scheme with Considering Seller Competition

This paper studies the online retailing promotion strategy in presence of seller competition. We consider two competing sellers who both sell substitutable products on an online retailing platform under a revenue sharing contract. The sellers simultaneously decide whether to join the promotion or not first and then the seller who chooses to join will decide his (her) own promotion rebate after the platform leads the promotion program. This paper characterizes the sellers' and the platform's optimal strategies and profits among different competition scenarios with Nash Game and Stackelberg Game Model. In the numerical study, we can directly infer that the two sellers will be caught in a Prisoner's Dilemma where they may conduct fierce price competition when the platform's commission rate is rather small. At this time, the platform will earn more without offering any platform rebate among other promotion scenarios.