New brand introduction and selling mode choice for online retailers with network effect

This paper builds a game‐theoretic model to examine online retailers' decisions of whether to introduce a new brand and whether to sell it in reselling or agency selling mode if introduced, given one existing brand supplier ex ante. We find it is not always more profitable for the online retailer to introduce the new brand. Interestingly, when determining to introduce the new brand, the online retailer may prefer the agency selling mode even though the commission fee becomes negligible and may not choose the agency selling even if the retailer can earn all sale profit as commission.