Bargaining in Live Streaming Commerce with Online Celebrity

64 Pages Posted: 20 Dec 2023

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: December 20, 2023

Abstract

Live streaming commerce is an innovative and immersive shopping format. This paper explores how a seller negotiates with a celebrity over the proportion of shared revenue of products sold through the live streaming channel. We build a game theoretical model to capture the bargaining process between the seller and the celebrity in which consumers choose to be followers or non-followers of the celebrity. We use a Markov chain framework to keep in check the transition process of celebrity's followers and non-followers. The key feature in our bargaining model is that the proportion of followers can affect the celebrity's bargaining power which in turn influences the split of the shared revenue. Our analysis yields several new results. First, when the celebrity's consumer-stickiness is sufficiently high, the celebrity can set a price to ensure not only a maximal total profit but also a maximal portion of the shared revenue (i.e., a larger slice from a larger pie). However, when the consumer-stickiness is lower, the celebrity either maximizes the total profit or maximizes its portion of shared revenue. Second, the seller can achieve the coordination in the live streaming chain through bargaining when consumer-stickiness is not intermediate, but a higher consumer-stickiness may not increase sellers' profits. Third, the celebrity tends to set a price (weakly) lower than that set by the seller, and the level of consumer-stickiness and the equilibrium price have a non-monotonicity relationship. Fourth, a strategic live streaming platform may restrict consumer traffic to the celebrity when the consumer-stickiness is intermediate.

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 (December 20, 2023). 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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