Impacts of misleading product information in livestream e-commerce supply chains

Abstract

The prevalence of misleading and distorted product information in livestream shopping (LSS) has sparked a debate on whether the government should regulate this issue. This study examines the impact of misleading product information in a competitive market with two firms offering value-differentiated products. Both firms can decide whether or not to sell products through an influencer by adopting the LSS mode. The influencer discloses additional product information during real-time interactions but may potentially convey misleading information. Our theoretical model reveals that the Nash equilibrium strategy for sales mode depends on the level of misleading. Interestingly, a high-value firm may benefit from misleading information of a low-value firm by maintaining information opacity. Specifically, when the level of misleading is high, equilibrium occurs where the high-value firm adopts the direct-to-consumer (D2C) mode, while the low-value firm adopts the LSS mode with the disclosure of misleading information. We also reveal the potential for a triple-win scenario – firm profitability, consumer welfare, and social welfare – through both firms adopting the LSS mode with a moderate level of misleading. Adopting the LSS mode may mitigate the problem of underconsumption in an imperfectly competitive market, even though it may distort the preconceived beliefs of consumers.

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