Speaker: Yinliang (Ricky) Tan, Assistant Professor, Tulane University

Time: 9:30, 12^th May. 2020

zoom：https://zoom.com.cn/j/96617544153

ID: 966 175 44153 Password: 781318

Abstract:

With the rise of the Internet economy, an increasing number of firms are offering their core products through online platforms, but retail add-ons directly to consumers. Meanwhile, many online platforms have also started adopting the agency (model) contract, where the upstream firms decide the retail prices of products while the downstream platforms take a predetermined cut from each sale. This study examines the interaction between an upstream firm’s add-on strategy and a downstream online platform’s distribution contract choice. We find that such a firm prefers bundling the add-on and the core product together under the wholesale contract, but prefers retailing the add-on separately under the agency contract. Our research thus is the first to suggest that the distribution contract can critically affect a firm’s choice between add-on pricing and bundling. On the platform side, we show that a higher commission rate does not always result in a higher profit for the platform under the agency contract. We further identify two conditions under which the platform prefers the agency contract over the wholesale contract: The commission rate for the platform cannot be too low, and the market potential of the add-on cannot be too large. For the overall channel, we show that the interaction between add-on pricing and distribution contracts leads to sub-optimal channel performance. That said, it is possible for both the firm and the platform to obtain higher profits under the agency contract than under the wholesale contract. Finally, we also demonstrate the robustness of our findings under several alternative model specifications. 

Speaker’s Bio:

Yinliang (Ricky) Tan is an Assistant Professor in the A.B. Freeman School of Business at the Tulane University. He received his Ph.D. in Operations Management and Information Systems from the University of Florida. He has rich teaching experience in business analytics at both undergraduate and graduate levels. Ricky has received several teaching recognitions including Dean’s Excellence for Graduate Teaching Award at Tulane University. His research interests include the management of technology, digital goods pricing, business analytics, and supply chain management. His work has been accepted for publication in journals including Management Science, MIS Quarterly, Information Systems Research, Production and Operations Management, Decision Sciences and other premier academic journals. Currently, he is a Senior Editor at the Production and Operations Management. He is recognized as one of the 40 Most Outstanding Business Professors Under 40 worldwide by Poets & Quants. He has also received the Carol J. Latta Emerging Leadership Award for Outstanding Early Career Scholars by Decision Science Institute.