Commission Rates Research Articles

Research on price forecasting and trading strategy based on data insight

The goal of establishing the model in this paper is to find the historical price patterns of gold and bitcoin according to the data provided. The purpose is to maximize returns under various market constraints and avoid loss risk as much as possible. Traders provide the best trading strategy. In this paper, two models are established: model 1: price prediction model based on ARIMA; Model 2: quantitative trading strategy model based on dynamic programming. For Model 1, a classical time series modeling approach based on stock forecasting was used: the ARIMA price forecasting model. The model's validity was demonstrated by analyzing the intrinsic trend of the data movements and verifying the smoothness. Next, historical data were used to fit the parameters of ARIMA, and the forecasting model was determined to be ARIMA (0, 1, 0) by the exhaustive method. Finally, the ARIMA predicts the up and down trends of gold as well as bitcoin, which provides the basis for the trading decision. For Model 2, to better quantify the relationship between investment risk and investment return, the Sharpe ratio is introduced, the Sharpe ratio's value is used as the main parameter of the trading strategy, and the corresponding planning equation is established. Then, based on the up and downtrend of the data predicted by the ARIMA model, the assets are allocated for investment. The model is optimized by a particle swarm algorithm, which accelerates the convergence of the model. Finally, this paper tests the model's accuracy to verify the correctness of the model. By adjusting the commission rate, it is found that the commission rate is negatively correlated with the number of large transactions of gold and bitcoin.

Reselling or agency selling? The strategic role of live streaming commerce in distribution contract selection

The booming live streaming business has increased the number of consumer options for purchase channels, which has had a significant impact on firm sales models and management practices. This paper considers a multiechelon supply chain in which an upstream supplier can sell products through an online platform and a live streaming sales channel, and the online platform can choose to sign a reselling agreement or an agency selling agreement with the supplier. By constructing a Stackelberg game, we theoretically derive the equilibrium strategies of the supply chain members under different selling agreements in the presence of a live streaming sales channel. Specifically, we find that under the reselling agreement, the optimal retail price for the platform decreases with an increase in the commission rate, while the retail price for the live streaming channel always increases with an increase in the commission rate, and the relationship between the wholesale price and the commission rate depends on the ratio of the coefficient on the internet celebrity’s effort for the live streaming channel to that for the online platform. Under the agency selling agreement, there is a threshold in the agency fee. The impact of the commission rate on pricing strategy on one side of the threshold is opposite that on the other side. Furthermore, we numerically explore the impacts of the system parameters on the selection of the sales model, profit, and the decision-making of the supply chain members and identify the conditions under which agency selling and reselling are chosen when there is a live streaming sales channel. Interestingly, we find that the internet celebrity should not charge a commission rate that is too large; otherwise, it harms others without benefiting the celebrity. Moreover, when the supplier chooses to hire an internet celebrity to sell goods via live streaming, the supplier should choose a celebrity with either an extremely large following or with little influence but should not choose a celebrity with only moderate influence.

Offline supplementary service strategies for the online marketplace: Third-party service or marketplace service?

Offline supplementary service that supports and enhances the core product is one of the key factors leading to the success of online sellers and the online marketplace. We explore the optimal supplementary service strategies for the online seller and online marketplace. We consider three kinds of supplementary service, namely unauthorised service (UAS), third-party authorised service (TAS), and marketplace authorised service (MAS). We identify that the marginal cost-revenue ratio (MCRR) shapes the service strategies of the online seller and marketplace. The seller prefers TAS when the MCRR is low but prefers UAS if it is high. However, when the MCRR is moderate, the seller provides both UAS and TAS simultaneously. In addition, we show that the marketplace offers MAS to the seller when the commission rate is relatively low or relatively high. The offering of MAS results in a win–win outcome for the seller and marketplace, and engenders a subsidising effect for the seller and consumer, as well as a revenue-enhancement effect for the marketplace. Interestingly, we find that a higher commission rate not only decreases the selling price but also increases the demand for the product-MAS bundle.

Marketplace or Hybrid: Vendor's Information Sharing with e-Retailer.

This study explores the information sharing (IS) in a supply chain (SC) with a vendor selling goods via an e-retailer to consumers. Four scenarios were considered for the multistage game between the vendor and the e-retailer, and the vendor's policy of IS and the e-retailer's decision on online platform access were discussed under each scenario. The results show that the e-retailer will access the online platform at a low fixed access fee and will not at a high fixed access fee. Whether the vendor shares information with the e-retailer or not, he/she always faces a worse situation with e-retailer's online access. The vendor's decision on IS hinges on the commission rate, contesting intensity, and fixed access fee. When the commission rate is low, the vendor will share the demand if the fixed access fee is low and will not share the information if the access fee is moderate. When the commission rate is high and the contesting is fierce, the vendor is willing to share the demand if the fixed access fee is low or moderate and has no difference in the decision on IS if the fixed access fee is high.

Self-supporting or third-party? The optimal delivery strategy selection decision for e-tailers under competition

PurposeWith the vigorous development of the e-commerce delivery service industry, delivery service has become an important factor for e-tailers to obtain the market competitive advantage. However, how to choose the best delivery service strategy is a difficult problem for e-tailers in practice. The purpose of this paper is to investigate the effect of delivery service on e-tailers and online platforms.Design/methodology/approachBased on the Stackelberg game, the research study establishes and solves three models, namely dual self-supporting delivery service model, dual third-party delivery service model and differential delivery service model.FindingsThe results show that when the self-supporting and third-party delivery cost coefficients are all small, no matter which delivery service providers the competitor selects, the e-tailer selects delivery with a lower service fee. When the self-supporting and third-party delivery service fee are all low, no matter which delivery service providers the competitor selects, the e-tailer selects delivery with a smaller service cost. Both service fee and service cost determine the choice of e-tailers' delivery strategy. When the commission rate is moderate, both e-tailers are willing to choose the self-supporting delivery strategy, but the platform only prefers to provide self-supporting delivery to them with a lower delivery service sensitivity coefficient.Originality/valueThis paper analyzes the optimal delivery service strategies for e-tailers to compete with competitors, and explores the impacts of parameters for e-tailers and online platforms in their decision-making. The findings provide valuable implications for relevant practices.

Optimal Channel Strategy for Dual-Channel Retailers: The Bright Side of Introducing Agency Channels

Driven by the prosperity of the online retail market and the success of the agency selling format, dual-channel retailers have engaged extensively in online retailing. However, whether dual-channel retailers act as intermediaries to introduce agency channels for third-party sellers in their online stores has not yet received sufficient attention. To address this problem, we perform game-theoretic analysis of the optimal channel strategy of a dual-channel retailer under three channel structures: No-agency mode, manufacturer-agency mode, and e-tailer-agency mode. Under each structure, the price competition model is studied, with the manufacturer as the Stackelberg leader and the retailer or authorized e-tailer as the follower. We analyze the optimal prices and profits of different structures and study the influence of agency channels. Our analysis shows that when the commission rate is higher than a certain threshold, the dual-channel retailer will introduce an agency channel for the third-party seller, and when the commission rate is high, the dual-channel retailer prefers to introduce an agency channel for the manufacturer rather than an authorized e-tailer. However, higher offline operating cost reduces the willingness of the dual-channel retailer to introduce an agency channel. Furthermore, the manufacturer will always benefit from the agency channel and, because of the mitigation of double marginalization, the manufacturer is most profitable in the manufacturer-agency mode. Finally, introducing an agency channel for the third-party seller can create a “win-win” outcome for the manufacturer and the dual-channel retailer, while the e-tailer-agency mode can increase the dual-channel retailer’s relative channel power under certain conditions.

THE IMPACT OF REMUNERATION ON SALES TURNOVER IN DUBAI’s AUTOMOTIVE AFTERMARKET: POST COVID-19

The global Automotive Industry generated revenue worth 2.5 trillion USD in 2020 and is expected to reach 2.8 trillion USD in 2022. In this, the contribution from the Automotive Aftermarket sector (AA) was 392.35 billion USD and it is predicted to cross 525 billion USD by 2028 (Research and Markets, 2021). The AA of Western countries and the Asia Pacific is studied exhaustively while little attention is paid to the Gulf region. The AA of the United Arab Emirates (UAE) is the fastest growing market with a 14.8% CAGR from 2020 to 2025, led by Dubai. By 2025, it is expected to reach 634.4 million USD (Prescient and Strategic Alliance, 2021). However, like other sectors, the AA experienced the Covid-19 rage in 2020 with a high impact on sales and employees. The decline in consumption of light vehicles during the pandemic and the shut down of business-to-customers trade counters reduced the revenue, forcing small and medium enterprises to reduce employees‟ costs (Laborda & Moral, 2020). The salesforce in the AA sector also experienced reductions in their monthly salaries, commission rate and other benefits (O‟Donnell & Marsh, 2022). However, the market condition improved in 2021 as UAE‟s AA witnessed an increase in revenues. According to the Automechanika Dubai 2021report, the AA is expected to boom post-Covid 19, especially due to an increase in customers‟ demand. This can be attributed to UAE‟s 100% residents being vaccinated, Expo 2020 in Dubai, improved foreign relations with Israel and relaxed travel regulations in Dubai (GMI Research, 2020). Following the role played by remuneration in motivating sales employees, it can be anticipated that during Covid-19 sales turnover may have declined and as market conditions improved, the sales turnover and remuneration may also have improved. Keywords: Automotive aftermarket, Remuneration, Sales turnover, Covid-19

Operational modes of E-closed loop supply chain considering platforms’ services

Technology development has diversified the operational modes in the E-closed loop supply chain (ECLSC). The manufacturer may cooperate with online platforms for sales and recycling. This paper derives and compares the optimal decisions under the wholesale mode or direct sales mode in the forward channel and under the entrusted recycling or direct recycling mode in the reverse channel. The analysis shows that increasing consumers' sensitivity to online services and reducing the cost coefficients of online services are always beneficial to all ECLSC partners. Increasing consumers’ sensitivity to recycling price is always beneficial to the manufacturer and collecting platform while increasing consumers' sensitivity to sales price is always detrimental to the manufacturer and sales platform. The sales and recycling commission rates are the two important factors that affect the selection of sales and recycling modes. The stability of ECLSC can be achieved when the manufacturer and sales platform choose the same sales mode in the forward channel and the manufacturer and the collecting platform choose the same recycling mode in the reverse channel, which needs to be achieved by reasonably setting the sales commission rate for the direct sales mode and the recycling commission for the direct recycling mode.

Quality and distribution channel selection on a hybrid platform

We consider a supply chain with a manufacturer selling a product to consumers through a hybrid online platform. The platform offers the manufacturer (she) two channels (agency and reselling channels) to sell her product. The literature assumes that the manufacturer can choose to sell her product through either the agency channel or the reselling channel, whereas this study expands the literature by allowing the manufacturer to sell her product through two channels, which is common in practice. Specifically, we study the manufacturer’s distribution channel decision on a hybrid platform and explore the impact of product quality on this decision. We reveal that it is not optimal for the manufacturer to sell solely through the agency channel in quantity competition. In the short run, she chooses to sell through the two channels if product quality is low and solely through the reselling channel otherwise. The manufacturer’s channel decision may benefit the platform and consumers, leading to a win-win-win outcome if the quality level is intermediate or sufficiently high. In the long run, the manufacturer can flexibly adjust product quality. Our analysis shows that if the commission rate is low, the manufacturer chooses a low-quality level and sells via both channels. Otherwise, the manufacturer chooses a high level of quality and sells solely via the reselling channel. Compared with the short-run model, if the manufacturer is efficient in manufacturing a high-quality product, the quality decision enlarges the region where she sells solely through the reselling channel and the region where the platform benefits from the channel decision. Although the quality decision narrows the region where consumers benefit from the manufacturer’s channel decision, it nonetheless enlarges the region where the win-win-win outcome occurs.

The entry quality threshold setting and commission rate contract selection of a peer-to-peer service sharing platform

PurposeIn recent years, some peer-to-peer (P2P) service sharing platforms have improved their service quality by setting an entry quality threshold for service providers. Considering consumers' heterogeneous preferences for service quality and commission rate, it is worth studying how to select the commission rate contract for a P2P platform under a predetermined entry quality threshold for service providers.Design/methodology/approachIn this study, the platform's profit-maximizing model is constructed under two proposed contracts: unilateral commission rate contract and bilateral commission rate contract. The optimal entry quality threshold and the optimal commission rate are obtained. This study also explores the impacts of cross-side network externality and service price on a platform's optimal decisions and social welfare.FindingsResults show that it is always advantageous for the platform to adopt the bilateral commission rate contract, which is closely related to the strength of cross-side network externality, service price and quality sensitivity coefficient. Under certain conditions, adopting the unilateral commission rate contract can reduce platform profit and service provider surplus, and improve consumer surplus and social welfare.Originality/valueThis study analyzes the unilateral commission rate contract and the bilateral commission rate contract of the platform, and discusses which contract is beneficial to the platform, consumers and service providers. In addition, this study provides a basis for the operation decision of a P2P service sharing platform and the pricing decision of service providers.

Pricing strategy selection for the sharing platform with heterogeneous laborers

In recent years, labor-sharing platforms have attracted widespread attention, and platforms such as Eatwith and ZBJ (ZBJ.com) have developed rapidly. The platforms connect labor providers and buyers by charging a fee. Although most labor-sharing platforms are structured in the same way, they have no clear, dominant pricing strategy. Some platforms adopt a labor-pricing strategy (LP strategy), while others adopt a bargaining-pricing strategy (BP strategy). Buyers can decide whether to purchase services on the platform based on their valuations. Laborers can offer services and decide whether to sell on the platform. In this research, we consider a platform that contemplates labor-sharing and designs its optimal pricing strategy by accounting for the two-sided trade-off between time savings and clarity in service quality. We also consider whether laborers or buyers should pay to connect to the platform under the BP strategy. First, our research shows that the impact of the platform’s commission rate on the price under the BP strategy is nonmonotonic. In addition, we find that the market composition of labor and service quality can affect the labor-sharing platform’s pricing strategy. Specifically, the LP strategy does not always perform well, explaining why some labor-sharing platforms adopt the BP strategy in practice. Finally, we demonstrate that the labor-sharing platform should choose different profit methods to maximize profits under different circumstances when adopting the BP strategy in the extension model.

Can a Restaurant Benefit from Joining an Online Take-Out Platform?

In this paper, we study a restaurant’s take-out model choice and the coordination of an online take-out supply chain. To this end, we first derive the restaurant’s optimal price and/or platform’s commission rate under the restaurant’s three possible take-out models: do not provide online take-out service (NTO model), provide take-out service by joining an online take-out platform (TOF model), or provide online take-out service by itself (TOH model). We investigate the restaurant’s optimal take-out model choice. We then derive the optimal decisions of price and the take-out model under centralization, and study the online take-out supply chain coordination problem. We find that, first, the restaurant may not always benefit from providing online take-out service. It will be beneficial only if the incremental demand generated by take-out service is high. Second, under the centralized supply chain, the TOF model is always better than the TOH model. Meanwhile, when the incremental demand is high, the restaurant should choose the TOF model; otherwise, the NTO model is better. Third, we find that the restaurant’s take-out price and model choice decisions under a decentralized supply chain are both inconsistent with that under the centralized supply chain. Last, we design a sales reward contract which can achieve the price and model choice coordination as well as win-win outcomes for all supply chain members.

Marketplace or reselling: the pricing decisions and face value of the coupons under the Cap‐and‐Trade regulation

AbstractThis paper considers a manufacturer selling his products with the marketplace or the reselling mode under the cap‐and‐trade regulation. Coupons are allocated when selling the products. We explore the optimal decisions, the selection and the coordination with the two modes. First, we analytically find that the increase of the cap and platform power (commission rate) increases (decreases) the total production quantity and the optimal production quantity for coupon‐sensitive consumers, and interestingly find that it reduces (increases) the production quantity for coupon‐insensitive consumers when the sensitivity of the coupons is high. Furthermore, the optimal profit of the manufacturer first increases and then decreases with the cap when the emission intensity is low, and it increases with the cap when the emission intensity is high. Second, the marketplace mode creates more (less) profits for the manufacturer if the order‐fulfillment cost is low (high). Whether the marketplace mode or the reselling mode will generate more carbon emission depends on the commission rate and the platform power. Finally, the marketplace mode is not capable of coordinating the manufacturer and the platform at all times, while the reselling mode can coordinate the two firms after considering a coupon‐sharing contract under considerable platform power, and they can achieve Pareto improvement with a two‐part tariff contract under the generalized Nash bargaining framework.

Two-Sided Platform Competition in a Sharing Economy

We examine competition between two-sided platforms in a sharing economy. In sharing economies, workers self-schedule their supply based on the wage they receive. The platforms compete for workers as well as consumers. To attract workers, platforms use diverse wage schemes, including fixed commission rate, dynamic commission rate, and fixed wage. We develop a model to examine the impacts of the self-scheduled nature of the supply on competing platforms and the role of the wage scheme in the platform competition. We find that the price competition between platforms is more intense in a sharing economy compared with an economy with a fixed supply of workers if and only if the platforms serve more consumers and workers in the sharing economy than in the traditional economy, regardless of the wage scheme employed by the platforms. Further, any of the three wage schemes can be the best for the platforms and the worst for consumers and workers, depending on the market characteristics. In markets where the competition is more fierce on the demand side than on the supply side, the fixed-wage scheme results in the highest profits for the platforms and lowest surpluses for consumers and workers. In contrast, in markets where the competition on the supply side is more competitive, when the supply is highly (mildly) more competitive, the fixed-commission-rate (dynamic-commission-rate) scheme generates the highest profits for platforms, leading to the lowest surpluses for consumers and workers and the lowest social welfare. The differential impacts of the wage scheme on the price (demand side) and quantity (supply side) competition explain our findings. This paper was accepted by Kartik Hosanagar, information systems. Supplemental Material: The e-companion is available at https://doi.org/10.1287/mnsc.2022.4302 .

Fixed Fee or Proportional Fee? Contracts in Platform Selling Under Asymmetric Information

ABSTRACT In platform selling, platforms commonly charge third-party sellers a commission fee, which affects sellers’ decision making and platforms’ contract choice. This study explores this choice where a platform privately knows the market size and intends to signal to a seller. We aim to provide researchers and platform-selling practitioners insights into contract and information strategies. The result shows that the fixed-fee contract leads to either a costly or a costless signaling scenario. In costly scenarios, the high-demand platform must downward distort the fixed rent to distinguish itself from the low-demand platform. This distortion results in a different consensus on two players’ contract preference when the commission rate in the proportional-fee contract is exogenous. Under symmetric information, consensus is achieved only on the proportional-fee contract. However, in asymmetric information settings, this consensus may arise on fixed-fee contracts if market uncertainty is high. Furthermore, the comparison of information strategies reveals that players can reach an agreement on both the information-sharing strategy and the proportional-fee contract under certain conditions. When the platform endogenously determines the commission rate, this decision making can also signal demand type, and only the proportional-fee contract leads to a win–win outcome.

Consumer privacy and distribution contract

PurposeIn the Information Age, an increasing number of firms and researchers focus on consumer privacy. Meanwhile, many firms that collect consumer information through, information disclosure, consumer privacy, agency model, distribution contracts products or services often adopt the agency contract or the wholesale contract to sell through the online platform. This study aims to examine how different distribution contracts affect supply chain decisions when the firm can profit from disclosing consumer information.Design/methodology/approachThe authors use Stackelberg model to describe the relationship between consumer privacy and distribution contracts. Solve the model and analyze the monotonicity of the equilibrium results. The optimal contract choice and win-win conditions are obtained by comparing the profits under different contracts.FindingsThe authors find that when consumers’ maximal valuation is low in the market, the firm prefers to profit from disclosing consumer information under both the agency contract and the wholesale contract. As consumers’ maximal valuation increases, the firm turns to profit from product sales. Under the agency contract, the platform only generates profit when the consumers’ maximal valuation is high. By comparing the profits of the platform under the two types of contracts, the authors find the platform’s optimal contract choice under different consumers’ maximal valuations and platform commission rates. Combined with the comparison results of the firm’s profit, the authors provide the win-win conditions under the agency contract and wholesale contract.Originality/valueThis study analyzes the supply chain decision under the agency contract and wholesale contract, and it helps deepen the understanding of the interaction between consumer information disclosure and channel distribution contract.

Green Technology Investment with Data-Driven Marketing and Government Subsidy in a Platform Supply Chain

Expanding green consumption market and precise data promotion advantages make the platform economy have a significant effect on influencing manufacturers to carry out green R&D and production activities, and government subsidies have a positive incentive effect. In this context, for the studies about platform supply chain management with manufacturer’s green production and the platform’s marketing activities simultaneously are rare, we consider that a manufacturer invests in green technologies to produce products and sell them through a smart platform supply chain by an agency selling or reselling strategy, in which the platform provides data-driven marketing technology to promote green products. Four game models are constructed to study the operational efficiency of the platform supply chain considering selling strategy difference and government subsidy. The results show that: (1) The manufacturer’s green technology and the platform’s data-driven marketing levels, as well as all member’s profits are all influenced by the potential market demand of green products, the sensitivities of consumers to green product attributes, and data analysis technology. (2) The service commission rate charged by the platform plays a main role on the manufacturer’s selling strategy choice, when the service commission rate is low, the manufacturer chooses an agency selling strategy and can obtain more profit, but now the green technology level is not necessarily better than that in the reselling system. With the service commission rate increases, a manufacturer that chooses the reselling strategy can obtain more profit, and the green technology level is better than in the agency selling system. (3) Government subsidy can effectively encourage the manufacturer to improve the green technology level, and now the platform will improve the data-driven marketing level. There is a threshold range of the service commission rate charged by the platform in which the government can guide the manufacturer and the platform to reach an equilibrium selling strategy by regulating the subsidy level.

Joint optimization of e-commerce supply chain financing strategy and channel contract

With the rise of the e-economy, online retailers, which are often financial-constrained, can choose to borrow from e-commerce platforms in addition to traditional financial institutions. Many e-commerce platforms adopt two types of market channel cooperation contracts: Reselling or Marketplace. We model their interaction as a Stackelberg game, studying the interaction between the financing strategies of the online retailers and the channel sales cooperation contracts of the e-commerce platforms. We observe the characteristics and applicable conditions in four modes. Results show that the working capital level of the online retailer will affect the preferences of both parties. Specifically, when working capital is low, platform direct financing has no advantage over bank financing. By contrast, a higher level will affect the operational decisions of the e-commerce platform, mainly due to the trade-off between sales revenue and interest income. Combined with the characteristics of online trading information collected by e-commerce platforms, we find that platform can provide a means of risk control to guarantee the benefits of both parties and solve the financing dilemma caused by low working capital. We further determine that the fixed commission rate of the platform should not be too large, otherwise the profits of the online retailer will be greatly weakened. This paper proves the necessity of the existence of transfer payment platform usage fee. Our findings not only complement the emerging online marketplace literature for e-commerce platforms but also provide enlightenment on working capital management for small and medium-sized enterprises and self-employed individuals such as online retailers.

Manufacturer’s selling mode choice in a platform-oriented dual channel supply chain

This paper considers a platform-oriented dual channel supply chain (PDCSC), in which the online retailer resells products in a marketplace provided by the platform and the manufacturer chooses a selling mode to introduce a dual channel. Three possible selling modes for the manufacturer are considered: (1) Reselling mode (Mode R); (2) Agency selling mode (Mode A); and (3) Direct selling mode (Mode D). We examine the manufacturer’s equilibrium strategy and how this choice affects the other supply chain members’ preferences. By comparing equilibrium profits in the three selling modes, we demonstrate that the manufacturer prefers Mode D when the direct operating cost is relatively low. Otherwise, either Mode R or Mode A is optimal, largely depending on the interaction between competition intensity and commission rate. More specifically, if both the competition intensity and commission rate are low, Mode A is the optimal choice; if the competition intensity is low but commission rate is high, Mode R is optimal; if the commission rate is relatively high, the manufacturer should choose Mode R. Finally, we further characterize the influences of the different selling modes on the profits of the online retailer, the platform, and the whole supply chain. We also extend the model by considering the case where the online retailer and platform have equal channel power and set prices simultaneously, the case of Cournot competition, and the case where the platform acts as the channel leader.

Reselling or agency model under markdown pricing policy in the presence of strategic customers

This paper establishes a game‐theoretic model to investigate the effect of strategic customers on the business model choice between the reselling and the agency models under a markdown pricing policy. We find that the supplier always prefers the agency model whereas the retailer's preference depends on the commission rate, the proportion of strategic customers, and the supplier's inventory level. Results also reveal that regardless of the business model, the proportion of strategic customers, the patience level of strategic customers, and the supplier's inventory level are three driving forces in the markdown pricing policy. Finally, different from the conventional wisdom that suggests the centralized decisions always outperform the decentralized decisions, we find that the decentralized decisions under the agency model can achieve the same performance as the centralized decisions when the supplier has a relatively small inventory level. Surprisingly, when the supplier has a relatively large inventory level, the agency model outperforms the centralized model since the former leads to lower prices and stimulates more demand.