The impact of live streaming on competitive e-commerce

Live streaming e-commerce has been booming in recent years. This paper investigates the pricing and live streaming adoption strategies of competitive e-commerce firms. We consider the differences in product quality and consumer heterogeneity and establish a duopoly competitive Hotelling model. Taking into account consumers’ uncertain perception of product quality and live streaming costs, the equilibrium outcomes are examined. Our findings indicate that (1) e-commerce firms selling high-quality products should consider adopting live streaming, while others should avoid it if consumers hold moderate product quality expectations. (2) E-commerce firms can be more profitable without live streaming when the market expectation or perceived quality of the products is high. (3) If only the e-commerce firm selling high-quality products utilizes live streaming, the optimal price would be lower, even when the product quality is relatively high, provided that the perceived quality is very high.