Information Sharing in an Online Marketplace with Co‐opetitive Sellers

Abstract

In recent years, the rapid development of online marketplaces has given rise not only to co‐opetitive relationships between sellers but also to information asymmetries between online marketplaces and sellers. This study studies information sharing in an e‐commerce setting consisting of an online marketplace, an upstream manufacturer and a reseller, where the online marketplace possesses superior demand information, while the manufacturer and reseller engage in a co‐opetitive structure. The reseller procures products from the manufacturer under a wholesale price contract, and both the manufacturer and reseller sell the products through the online marketplace by paying a proportional commission fee. We examine four information‐sharing scenarios: no information sharing (S1), full information sharing (S2), information sharing only with the manufacturer (S3), and information sharing only with the reseller (S4). Our analysis shows that when the intensity of competition between the manufacturer and reseller is relatively low and demand variability is moderate, the online marketplace prefers full information sharing; otherwise, it prefers to share its demand information only with the manufacturer. Moreover, interestingly, we find that the manufacturer always prefers the scenario with full information sharing to the scenario that endows her with an informational advantage over the reseller. In contrast, depending on the competitive intensity and demand variability, the reseller prefers either the scenario in which the online marketplace shares demand information with him only or that in which demand information is shared with the manufacturer only. Furthermore, we find that the equilibrium information‐sharing outcome can be either full information sharing or information sharing only with the manufacturer. The rationale behind these results hinges on the interactions among the signaling cost, efficiency effect, and co‐opetitive relationship between the manufacturer and reseller.