Platform encroachment with price matching: Introducing a self-constructing online platform into the sea-cargo market

Constructing online platform can effectively change the traditional booking behavior of shipper into the coexistence of offline and online platform while it also causes the intensified competition to price matching. This paper investigates the equilibriums of platform encroachment and price matching in a sea-cargo supply chain with a liner company and two asymmetric forwarders. Using a game-theoretic model, it can be characterized as Stackelberg-Nash game with a Bertrand competition to determine whether to encroach existing sea-cargo market and adopt the price matching or not. We observe that only forwarder with small market adopts price matching if the gap of forwarding markets is large enough, regardless of whether encroaches or not. Further, under the non-encroachment scenario, the dominant forwarder tends to adopt price matching, and the existence of online platform leads to the situation that both forwarders adopt price matching. Moreover, due to the behavior of forwarder, the threshold of encroachment cost is significantly different, and the best opportunity to establish online platform is when two forwarders are well-matched. Additionally, with the increase of substitution degree in sea-cargo market, the forwarders that correspond to adopt price matching is mainly because liner company chooses to encroach.