Abstract
Online Delivery Platforms (ODPs) act as intermediaries between sellers and buyers. We conceptualize a Nash equilibrium problem where two ODPs are competing for new customers in an infant market. The platforms are required to maintain a capacity per customer while expanding. Due to competition, the market ceiling of each platform is dependent on its competitor’s actions. Bass diffusion and logistic growth functions have been used to model customer and seller growths respectively. We assume that more capacity bring in more sellers; and customers are attracted by the promotional activities, number of sellers, and service quality (capacity per customer) of a platform. Both platforms wish to effectively allocate their budget between the two decision variables, capacity and promotion. The decision variables are incorporated within the Bass function and the logistic function. We also assume that customers cannot multi-home, that is, they choose one of the two ODPs. Therefore, acquiring new customers is critical. Two non-linear programs (NLP) outline the Nash equilibrium problem. A solution algorithm derived from the Jacobi-type decomposition method has been proposed to find Nash equilibrium using the NLPs. We have analyzed the properties of the Nash equilibrium along with the results from the numerical experiments.
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Ashraf, S., Bardhan, A.K. Optimal resource allocation strategies of competing new online delivery platforms using the Bass diffusion model. Ann Oper Res (2023). https://doi.org/10.1007/s10479-023-05410-6
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DOI: https://doi.org/10.1007/s10479-023-05410-6