Analysis of E-commerce Platforms’ Price War: Based on Game Theory Model

Based on the fact that T-mall and JD.com, two major e-commerce platforms, reduce prices significantly every year in shopping festival, but still can obtain high profits, this paper explains causes profit mechanism from perspective of game theory. Meanwhile, article builds a Bertrand model to analyze firms. The Nash equilibrium is (Discount, Discount) until they drop their 0, which obviously against reality both companies gain profits during consumers also buy goods at lower prices. Therefore, there possibility collusion between Finally, introduces trigger strategy, conclusion make long run as cooperate with each other. In addition, consumers, platforms government, gives reasonable decision-making strategy festival. This research not only provides promotion programs for helps understand platforms. At same time, government get inspiration it, such setting minimum price avoid disruption market order by vicious competition.