Bargaining in Live Streaming Commerce with Online Celebrity

55 Pages Posted: 20 Dec 2023 Last revised: 22 May 2024

See all articles by Qianqian Chen

Qianqian Chen

Zhejiang University

Shouchang Chen

Zhejiang University - School of Management

Chun Dong

Zhejiang University

Lin Liu

Beihang University

Yi Yang

School of Management, Zhejiang University

Date Written: May 21, 2024

Abstract

Live streaming commerce is an immersive shopping format with intriguing features. We explore a scenario where a seller and a celebrity negotiate revenue-sharing, while consumers decide whether to follow the celebrity. Our model reflects a key aspect of live streaming commerce: the celebrity's bargaining power is tied to her follower count, making both parties' bargaining power endogenous. Our analysis uncovers the central tension between maximizing total profit (``pie effect'') and maximizing shared revenue (``slice effect''). Interestingly, we find that the celebrity's popularity moderates how the two players balance the two effects. When the popularity is either high or low, the two effects are well-matched, either the celebrity or the seller can achieve maximum total profit and maximum shared revenue simultaneously. However, when the celebrity’s popularity is moderate, the slice effect may dominate the pie effect, both players may have the incentive to set the equilibrium price apart from the one maximizing the total profit. This will lead to several main insights, for example, hiring a more popular celebrity does not always benefit the seller and may lead to a lower equilibrium price; the platform may strategically limit traffic to the celebrity to prevent profit reduction.

Keywords: live commerce, online celebrity, negotiation, endogenous bargaining power, traffic control

Suggested Citation

Chen, Qianqian and Chen, Shouchang and Dong, Chun and Liu, Lin and Yang, Yi, Bargaining in Live Streaming Commerce with Online Celebrity (May 21, 2024). Available at SSRN: https://ssrn.com/abstract=4670400 or http://dx.doi.org/10.2139/ssrn.4670400

Qianqian Chen

Zhejiang University ( email )

Hangzhou, Zhejiang 310058
China

Shouchang Chen

Zhejiang University - School of Management ( email )

Hangzhou, Zhejiang Province 310058
China

Chun Dong

Zhejiang University ( email )

38 Zheda Road
Hangzhou, Zhejiang 310058
China

Lin Liu

Beihang University ( email )

Xueyuan Road, Haidian District
Beijing, 100191
China

Yi Yang (Contact Author)

School of Management, Zhejiang University ( email )

38 Zheda Road
Hangzhou, Zhejiang 310058
China

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