Channel addition from marketplace or reselling under regional carbon cap-and-trade regulation

Abstract

Many e-commerce supply chains adopt dual channels (marketplace and reselling) to reach more consumers. Comparison between the two channels has been thoroughly conducted in the literature. However, in most cases, the two channels are adopted sequentially rather than simultaneously. Research on whether to add another channel to a current channel is deficient. This paper investigates the channel addition problem of a manufacturer who currently sells products through an online platform via either marketplace or reselling channel. Regional carbon cap-and-trade regulation is applied on the manufacturer. We explore the optimal decisions and compare the optimal decisions and the profits of the manufacturer before and after channel addition. First, in the single channel, the optimal production quantities are increasing in the region-cap. However, in the dual-channel case, they are decreasing in the region-cap when the competition intensity between the two channels is moderate. Second, it is found that when adding reselling channel to marketplace channel, the manufacturer's profit will always increase; when adding marketplace channel to reselling channel, the manufacturer's profit will decrease if the commission rate is low and the order-fulfillment cost is high. Finally, the manufacturer and the platform cannot be coordinated in either marketplace channel or reselling channel without contracts, but can be coordinated in the dual-channel structure if the commission rate is low.