Optimal Pricing and Quality Decisions in Supply Chains With Consumers’ Anticipated Regret and Online Celebrity Retailers

Abstract

Shopping on a live-streaming e-commerce platform has become a popular way of consumption. In this article, we build models to study the decision-making of online celebrity retailers (OCRs), taking into consideration consumers’ anticipated regret behaviors. We explore the OCRs optimal pricing and quality decisions under the basic models and further examine the OCRs sales efforts in the extended model. We investigate the impact of consumers’ anticipated regret behaviors on the OCRs profit. After that, we examine when the supply chain with the OCR can achieve the win–win outcome. To assess the robustness of the results, we conduct extensive numerical studies of the basic and extended models. We derive a counterintuitive result that negative consumers’ anticipated regret does not necessarily hurt the OCRs profit and consumer surplus. In addition, a low consumers’ search cost may instead lead to higher profit for the OCR. If the channel construction cost of the live-streaming platform is low, the OCRs product quality and price will decline. The OCRs costs of handling returns and maintaining sales channels can help the supply chain achieve the win–win outcome for both the OCR and consumers.