The selection of marketplace mode and reselling mode with demand disruptions under cap-and-trade regulation

Abstract

ABSTRACT This paper studies a cooperating mode selection problem of a manufacturer who sells its products through an offline channel and an online platform under cap-and-trade regulation. The platform can operate with marketplace or reselling mode. We investigate the manufacturer's optimal operational decisions and selection of the platform's modes considering demand disruptions. First, when the carbon cap decreases in the application process, this regulation is firstly easy and then hard to be implemented if the cross-channel effect is small. Even though the platform increases its commission rate, greater cross-channel effect can still bring more production. Second, the increase of demand disruptions brings more profits for the manufacturer and the platform. Specifically, considering demand disruptions, the total profit with reselling mode in decentralised case is larger than that in centralised case under some situations. Third, without demand disruptions, the manufacturer prefers marketplace mode (reselling mode) if the commission rate is low (high). However, demand disruptions make the manufacturer's mode selection a little complicated. Lastly, without demand disruptions, the two firms can be coordinated with reselling mode but cannot be coordinated with marketplace mode. With demand disruptions, the two firms can be coordinated with the two modes in some situations.