Dynamic optimal revenue-sharing strategy in e-commerce

Abstract

In this paper, we consider a dynamic revenue-sharing problem between a platform and a seller in e-commerce. We formulate the revenue-sharing problem as a dynamic principal-agent problem, which is then transformed to a stochastic optimal control problem where the objectives of the platform are to find an optimal revenue-sharing strategy and to advise an incentive-compatible effort to the seller. The sufficient conditions for the existences of the optimal revenue-sharing strategy and the incentive-compatible effort are obtained. A numerical example is solved to show the existences of the strategy and the effort. © 2011 Springer-Verlag.