Optimal Strategies for a Monopoly Intermediary in the Supply Chain of Complementary Web Services.

Author List: Tang, Qian Candy; Cheng, Hsing Kenneth;

Journal of Management Information Systems, 2006, Volume 23, Issue 3, Page 275-307.

Web services are interoperable and reusable software components that can be dynamically discovered and integrated over the Internet. Developed on open standards, Web services have become a promising solution to inter- and intra-organization application integration. The supply chain of Web services exhibits two distinct features that are not considered in previous literature on information and physical-good supply chain: the integration of multiple Web services and the cross-network externality effect between Web service vendors and users. In a quest to fill in the research gap, this paper studies the optimal pricing strategies of a monopolistic intermediary in the supply chain of complementary Web services. The Web service intermediary (WSI) provides both technical and aggregation services, and seeks to charge optimal subscription and listing fees. Analytical results show that in a supply chain of complementary Web services exhibiting cross-network effects, the optimal strategy for the WSI is to set the listing fee such that all service providers list on it. On the other hand, the optimal subscription fee depends on the intensity of the cross-network effect, consumers' valuation of value-added services, and the characteristics of the Web services under consideration.

Keywords: business intermediary;complementarities;network externalities;supply chains;Web services

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List of Topics

#112	0.422	services service network effects optimal online pricing strategies model provider provide externalities providing base providers fee complementary demand offer derive
#52	0.133	supply chain information suppliers supplier partners relationships integration use chains technology interorganizational sharing systems procurement buyer interfirm coordination enterprises flexibility
#33	0.113	web site sites content usability page status pages metrics browsing design use web-based guidelines results implications portal loyalty navigability addition
#5	0.091	consumer consumers model optimal welfare price market pricing equilibrium surplus different higher results strategy quality cost lower competition firm paper
#171	0.061	markets industry market ess middle integrated logistics increased demand components economics suggested emerging preference goods interesting form recent vertically chinese