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DESCRIPTION:Yun Zhou\n\nDeGroote Scholl of Business\n	McMaster University\n
 \nPlatform Entry and Vendor Competition in On-Demand Economy\n\nDate: Frid
 ay\, April 11\, 2025\n	Time: 10:00 - 11:00 am\n	Location: Bronfman Building\
 , Room 046\n\n\nAbstract\n\nWe consider an on-demand delivery system with 
 multiple competing vendors and examine the impact of introducing a deliver
 y platform on their competition. Customers have preferences for differenti
 ated vendors while also being sensitive to the overall cost of both the fo
 od price and the delivery fee. They place orders from a vendor only if the
 y can be delivered within a specified delivery window. Each vendor strateg
 ically decides whether to participate on the platform\, build its dedicate
 d delivery fleet (i.e.\, employing in-house delivery)\, or not offer any d
 elivery option (i.e.\, exclusively serving local customers as an outside o
 ption) to maximize its profit. Vendors who build their own dedicated deliv
 ery fleets decide on both the food price and delivery fee. Vendors who cho
 ose to participate on the platform set their food price\, while the profit
 -maximizing platform sets the delivery fee and takes a commission from the
  vendors' revenue. We solve for the system equilibrium and benchmark it ag
 ainst the system without the platform. Our findings indicate that the intr
 oduction of the platform either intensifies vendor competition\, leading t
 o lower vendor profits and higher individual customer surplus\, or convers
 ely\, alleviates vendor competition\, leading to higher vendor profits and
  lower individual customer surplus. The intensifying or alleviating role o
 f the platform on vendor competition hinges on the competitive environment
  of the market in which the vendors operate. We characterize conditions un
 der which the platform's equilibrium strategy involves subsidizing per-ord
 er delivery to encourage vendor participation. However\, perhaps surprisin
 gly\, the seemingly appealing per-order delivery subsidy (offered by the p
 latform to attract vendor participation) hurts vendors by encouraging them
  to engage in more intensified competition\, ultimately diminishing their 
 profits. Conversely\, if the platform derives profits from per-order deliv
 ery\, introducing the platform alleviates vendor competition and benefits 
 vendors. Therefore\, the platform-enabled sharing of couriers can improve 
 delivery efficiency and lower delivery costs but may intensify vendor comp
 etition through per-order delivery subsidy\, placing them in a prisoner's 
 dilemma that ultimately lowers their profits. These insights also apply to
  an e-commerce platform that provides storage and fulfillment services wit
 h economies of scale enabled by aggregating the business of sellers operat
 ing on the platform.\n\nAccess full paper\n
DTSTART:20250411T140000Z
DTEND:20250411T150000Z
LOCATION:Room 046\, Bronfman Building\, CA\, QC\, Montreal\, H3A 1G5\, 1001
  rue Sherbrooke Ouest
SUMMARY:Management Science Research Centre (MSRC) Seminar: Yun Zhou
URL:/desautels/channels/event/management-science-resea
 rch-centre-msrc-seminar-yun-zhou-364887
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