Beschreibung:
Uncertainty in quality and the inspectors’ imperfect testing capability leave agricultural products (e.g., fresh produce, seafood, and livestock, etc.) wide open to economically motivated adulteration (EMA), and the strong demand for online shopping of these products in China makes this situation even worse. In this paper, we develop a game-theoretic framework to investigate online agricultural product sellers’ EMA behavior on an ecommerce platform (EP). Particularly, the sellers differ from each other in their production quality levels, i.e., the original quality of their products. We characterize the sellers’ equilibrium pricing and adulteration decisions and the EP’s optimal take rate decision, and analyze how the sampling inspections and adulteration penalty jointly impact these decisions. Moreover, we investigate three managerial levers that the administrative department (i.e., devising a penalty scheme to avoid EP’s malpractice regarding food safety management) or the EP (i.e., claiming a higher-than-law-requires penalty to consumers and adopting traceability system) can use to deter EMA. Finally, we use the real-word data from Taobao.com to calibrate our model and derive more managerial insights from the analytical findings. Interestingly, we find that the heterogeneous sellers’ adulteration decisions are symmetric and their ex-post pricing decisions lead them to evenly share the market on the EP. Furthermore, we show that the EP’s higher take rate can inhibit the sellers’ adulteration behavior, however, the profit-maximizing EP may indulge the sellers’ such behavior by intentionally decreasing this rate. Our results highlight a penalty-inspection-centered as essential to combat EMA, and the three levers can play a role as supplements to this approach under certain conditions