Live streaming platform operations and coordination under the cap-and-trade regulation: Platform-enabled mode versus platform-agency mode

Abstract

We consider a supply chain consisting of a supplier and a manufacturer where the manufacturer sells its products directly or through a live streaming platform (LSP). Operating in either the platform-enabled and platform-agency mode under the cap-and-trade regulation, the platform has platform power that reflects its ability to expand the market size. We find that the optimal production quantity in the platform-agency mode may decrease with the cap and platform power. The supplier and manufacturer can always be coordinated under the wholesale price contract in the platform-enabled mode. However, in the platform-agency mode, the two firms can be coordinated under low or high platform power, but whether coordination is achieved under moderate platform power depends on the unit carbon emissions of the products. If the platform power is low or high, the platform-enabled mode yields more total production quantity; otherwise, the platform-agency mode yields more total production quantity. Whether the platform-enabled or platform-agency mode generates a higher profit for the manufacturer highly depends on the promotion cost. By considering product investment and sales effort, we find the following: (i) When considering product investment, the supplier and manufacturer cannot be coordinated under the wholesale price contract in either mode. (ii) When considering sales effort, the firms can be coordinated in the platform-enabled mode, while in the platform-agency mode, whether they can be coordinated under the wholesale price contract depends on the cost coefficient and the unit carbon emissions of the products.