The choice between the agency and reselling modes considering green technology with the cap-and-trade scheme

Abstract

Given an online platform and a manufacturer, we research the platform mode choice where the two firms' cooperative mode is either the reselling or agency mode. With the cap-and-trade scheme, green technology is used to comply with this scheme and cater to consumers' environmental consciousness. We consider agency inefficiency and platform-enabled power, the platform's inherent characteristics in e-commerce, in our models. In addition, given the power structure, we consider three cases, namely the agency, manufacturer-led reselling, and platform-led reselling modes. Analyzing the optimal operational decisions, platform mode choice, and coordination problems in the three cases, we derive new and interesting findings. First, we uncover that increasing the cap weakens the optimal green level. However, increasing the cap first weakens and then enhances the optimal production quantity. Second, we uncover that the platform-led reselling mode is always more conducive to the production quantity and green level but the manufacturer-led reselling mode is more conducive to the manufacturer's profit. In addition, increasing agency inefficiency gradually enhances the market share, green level, and manufacturer's profit in the agency mode. Lastly, the manufacturer-led reselling mode can coordinate the two firms. Extending our models to consider the delivery time, we uncover that the agency and manufacturer-led reselling modes can coordinate the two firms.