Supplement_Brand-owners’ Cross-Border Free-shipping Decisions Considering the Two-Dimensional Competition of Product and Logistics Service

In cross-border e-commerce, free-shipping service and product price jointly influence consumers' purchase decisions. When brand-owners offer free-shipping service, it will bear both logistics and import tariff fees. Otherwise, these fees will be paid by the consumers. In this paper, we study the free-shipping decisions of two brand-owners A and B when they sell through a common cross-border e-commerce platform with the consideration of the two-dimensional competition of product and logistics service. We develop four strategy combinations (N, N), (N, F), (F, N) and (F, F) by considering brand-owners A and B provide free-shipping or not. We find that there exists three equilibrium strategies (N, N), (N, F) and (F, F) when the two brand-owners’ products are highly differentiated, depending on the logistics fee directly borne by consumers. In contrast, when their product competition is fierce, (N, N) and (F, F) are the equilibrium strategies