{"title":"A location and capacity-allocation game model for two competing online delivery platforms seeking new customers","authors":"Saad Ashraf, Amit Kumar Bardhan","doi":"10.1007/s10660-024-09891-w","DOIUrl":null,"url":null,"abstract":"<p>Online delivery platforms (ODPs) deliver products from restaurants, retailers, etc. to end customers. As an essential resource, ODPs must pay attention to the efficiency of delivery couriers. One such decision is their location and capacity allocation. This article discusses a competitive capacity and location decision problem in a market served by two ODPs. Both ODPs are trying to attract new customers to their platforms. For customers, timely delivery is the critical choice determinant. ODPs service existing demand orders on time by appropriately locating their couriers. Concurrently, they wish to capture potential demand by location and capacity allocation decisions. The competition propagates with both platforms acting strategically to stop the other from capturing new demand. The problem is formulated as a simultaneous two-person game and shown to be a Nash equilibrium problem. A mixed-integer linear programming model is proposed to find the Nash equilibrium location and capacity decisions of the players. This article contributes in two ways. First, it defines a new decision problem for an emerging area. Second, it finds important operational insights with managerial implications. The arguments for solution concepts, Nash equilibrium, and the efficiency of the proposed solution method are demonstrated through numerical experiments. It comes out that increasing the capacity budget is not always productive for ODPs. Also, for a weaker player, improving location decisions for servicing existing customers can be more beneficial than exclusively pursuing new customers. For the stronger player, competition may lead to underutilization of capacity.</p>","PeriodicalId":47264,"journal":{"name":"Electronic Commerce Research","volume":null,"pages":null},"PeriodicalIF":3.7000,"publicationDate":"2024-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Electronic Commerce Research","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.1007/s10660-024-09891-w","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
Online delivery platforms (ODPs) deliver products from restaurants, retailers, etc. to end customers. As an essential resource, ODPs must pay attention to the efficiency of delivery couriers. One such decision is their location and capacity allocation. This article discusses a competitive capacity and location decision problem in a market served by two ODPs. Both ODPs are trying to attract new customers to their platforms. For customers, timely delivery is the critical choice determinant. ODPs service existing demand orders on time by appropriately locating their couriers. Concurrently, they wish to capture potential demand by location and capacity allocation decisions. The competition propagates with both platforms acting strategically to stop the other from capturing new demand. The problem is formulated as a simultaneous two-person game and shown to be a Nash equilibrium problem. A mixed-integer linear programming model is proposed to find the Nash equilibrium location and capacity decisions of the players. This article contributes in two ways. First, it defines a new decision problem for an emerging area. Second, it finds important operational insights with managerial implications. The arguments for solution concepts, Nash equilibrium, and the efficiency of the proposed solution method are demonstrated through numerical experiments. It comes out that increasing the capacity budget is not always productive for ODPs. Also, for a weaker player, improving location decisions for servicing existing customers can be more beneficial than exclusively pursuing new customers. For the stronger player, competition may lead to underutilization of capacity.
期刊介绍：
The Internet and the World Wide Web have brought a fundamental change in the way that individuals access data, information and services. Individuals have access to vast amounts of data, to experts and services that are not limited in time or space. This has forced business to change the way in which they conduct their commercial transactions with their end customers and with other businesses, resulting in the development of a global market through the Internet. The emergence of the Internet and electronic commerce raises many new research issues. The Electronic Commerce Research journal will serve as a forum for stimulating and disseminating research into all facets of electronic commerce - from research into core enabling technologies to work on assessing and understanding the implications of these technologies on societies, economies, businesses and individuals. The journal concentrates on theoretical as well as empirical research that leads to better understanding of electronic commerce and its implications. Topics covered by the journal include, but are not restricted to the following subjects as they relate to the Internet and electronic commerce: Dissemination of services through the Internet;Intelligent agents technologies and their impact;The global impact of electronic commerce;The economics of electronic commerce;Fraud reduction on the Internet;Mobile electronic commerce;Virtual electronic commerce systems;Application of computer and communication technologies to electronic commerce;Electronic market mechanisms and their impact;Auctioning over the Internet;Business models of Internet based companies;Service creation and provisioning;The job market created by the Internet and electronic commerce;Security, privacy, authorization and authentication of users and transactions on the Internet;Electronic data interc hange over the Internet;Electronic payment systems and electronic funds transfer;The impact of electronic commerce on organizational structures and processes;Supply chain management through the Internet;Marketing on the Internet;User adaptive advertisement;Standards in electronic commerce and their analysis;Metrics, measurement and prediction of user activity;On-line stock markets and financial trading;User devices for accessing the Internet and conducting electronic transactions;Efficient search techniques and engines on the WWW;Web based languages (e.g., HTML, XML, VRML, Java);Multimedia storage and distribution;Internet;Collaborative learning, gaming and work;Presentation page design techniques and tools;Virtual reality on the net and 3D visualization;Browsers and user interfaces;Web site management techniques and tools;Managing middleware to support electronic commerce;Web based education, and training;Electronic journals and publishing on the Internet;Legal issues, taxation and property rights;Modeling and design of networks to support Internet applications;Modeling, design and sizing of web site servers;Reliability of intensive on-line applications;Pervasive devices and pervasive computing in electronic commerce;Workflow for electronic commerce applications;Coordination technologies for electronic commerce;Personalization and mass customization technologies;Marketing and customer relationship management in electronic commerce;Service creation and provisioning. Audience: Academics and professionals involved in electronic commerce research and the application and use of the Internet. Managers, consultants, decision-makers and developers who value the use of electronic com merce research results. Special Issues: Electronic Commerce Research publishes from time to time a special issue of the devoted to a single subject area. If interested in serving as a guest editor for a special issue, please contact the Editor-in-Chief J. Christopher Westland at westland@uic.edu with a proposal for the special issue. Officially cited as: Electron Commer Res
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