Information Transparency and Business Model Selection in Online Platforms under Manufacturer Competition

In this study, we investigate the interaction between an online platform’s information sharing strategy and its business model choice in a supply chain with two competing manufacturers both selling through a common online platform under demand uncertainty. The online platform possesses private demand information and arranges with each manufacturer either a reselling business model (R) or an agency business model (A). Our results show that the online platform prefers not to share information in the RR model without charging a fee, but prefers to do so with a manufacturer that adopts the agency model in the AAmodel or the AR/RAmodel. More interestingly, in the AA model, the online platform prefers to share information with only one manufacturer, rather than both, depending on the level of competition between the manufacturers. Moreover, the two manufacturers always benefit from the online platform sharing information, but do not always prefer to possess an information advantage over the competitor, especially when the competitor adopts the reselling model. Furthermore, our results also show that the impact of information sharing on business model choice depends on the level of competition, the commission rate and the value of demand information. The transparency generated by the online platform sharing information will increase the probability of the AA and AR models being adopted. Our findings can provide important managerial implications for the differentiated information sharing strategies of online platforms such Amazon and Tmall