Theoretical Analysis And Case Study On Quality Regulation Strategies Of Ecommerce Platforms

This paper develops a game-theoretic model to analyze the strategical interactions among consumers,retailers and the platform,thereby revealing the factors affecting platform quality strategies and the corresponding channels of influence.Along with the development of the digital economy,China’s e-commerce industry has continued to grow at a high rate in recent years,with many platform enterprises emerging and expanding.However,the quality of goods on e-commerce platforms has remained a serious problem due to the early crude operation and insufficient supervision.In the meantime,the transformation of business models arising from the platform economy has also posed a challenge to the government’s public regulation of platforms.It is therefore imperative to explore whether ecommerce platforms have an incentive to actively engage in quality monitoring as they expand their markets.Following the analysis of the motivation and strength of e-commerce platform’ quality regulation,this paper then analyses the interaction between the various strategies adopted by platforms,specifically in the context of the development characteristics of emerging e-commerce platforms,and examines how the expansion strategies of platforms change their quality regulation decisions.This paper studies the impact of social e-commerce,cross externalities,consumer subsidies,support for high-quality sellers and competition among platforms on the incentives and efforts to regulate quality on the platform.Based on the results of the theoretical analysis framework,this paper summarizes the characteristics of the evolution of quality regulation measures of Pinduoduo in recent years,and specifically analyses the economic intuition behind its quality strategies.This paper finds that platforms proactively regulate the product’s quality when consumers are relatively quality-sensitive and priceinsensitive,while high-quality sellers are more sensitive to market prices,and it is relatively easy for sellers to join the platform.In this case,platforms with social attributes and subsidized high-quality goods will have stronger quality controls.However,when considering competition with incumbent platforms,emerging platforms have an incentive to strategically reduce quality controls to mitigate competition.Taken together,the quality strategy of a platform requires comprehensive consideration concerning the platform’s prevailing characteristics and the competition environment.Pinduoduo has demonstrated increasing quality control in recent years,yet it also faces increasingly fierce competition with incumbent platforms such as Tmall.Hence Pinduoduo also has certain incentives to reduce the level of quality regulation.Quality improvement of products cannot rely entirely on the platform itself,but also needs to be accompanied by government regulation.This paper provides a new theoretical perspective for understanding the quality control behavior of China’s fast-growing e-commerce platforms,as well as policy directions for improving the effectiveness of cooperative governance between the government and the platforms.