The firm’s quality disclosure strategies under different selling schemes
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    Abstract:

    Current mainstream ecommerce platforms usually provide two selling schemes: The reselling scheme and the agency scheme. Firms that sell products on these platforms can choose either or both. This paper examines the firm’s quality disclosure strategies under three selling schemes: The reselling scheme, the agency scheme, and the mixed scheme. The analysis shows that a quality threshold exists under each scheme and that the firm chooses to disclose its quality only when the quality is above the threshold. The above result qualitatively holds when the firm endogenously decides the product quality. Moreover, the firm is less likely to disclose its quality when the proportion of high involved consumers or the search cost increases. Interestingly, unlike previous studies, when the consumer’s perception of quality difference in the mixed scheme is sufficiently high, the firm is more likely to disclose product quality under the mixed scheme than under the reselling scheme or agency scheme. In other words, competition stimulates the firm’s incentive to disclose its quality. Besides, by comparing the firm’s exante profits under the three schemes, it is found that when the commission rate of the platform is extremely high, the firm can obtain more by adopting the reselling scheme; in other cases, the firm can obtain more by adopting the mixed scheme.

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  • Online: July 19,2025
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