Collective profitability and welfare in selling-buying intermediation processes

Abstract

© Springer International Publishing Switzerland 2016. We consider tree-like intermediation business processes that guide the selling-buying activities through a set of transaction chains. A seller is reaching the market of potential buyers that are interested in its products through a set of intermediaries, rather than acting directly on the market. This process generates a tree-structured complex ecommerce transaction. In this paper we propose a formal model of such transactions based on rooted trees and welfare economics. This model enabled us to obtain theoretical results regarding the definition of collectively profitable intermediation transactions and optimal pricing strategies of the transaction participants.