Analysis of Middlemen's Decisions on Production and Business Models in the E-Commerce Environment

It is an important research topic to study the evolution of the middlemen's specialization in the e-commerce environment. The study is of great significance for the evaluation of the level and forecasting of the development of e-commerce industry. This paper presents a new definition of transaction efficiency based on the quantity of essential services and builds a middleman's specialized production decision model. By using the inframarginal analysis to solve the model, there are 4 basic patterns obtained. The results show that a middleman's specialized production decision is determined by the relationship of the transaction efficiency between factories, middlemen and consumers. If the transaction efficiency from factories to middlemen and that from middlemen to consumers remain unchanged, the increase of transaction efficiency from factories to consumers will enable middlemen to produce more types of services. When a certain threshold is reached, middlemen will turn to service providers who produce only one type of service.