Abstract
Speculative behaviors have burgeoned in various business settings whereby it is costly for consumers to purchase directly from sellers. This paper examines the values of two typical speculative behaviors, scalping and line-sitting, against a backdrop of markets with resale. We establish a two-stage model in which a monopolist seller sells an item (product or service) to consumers in the first stage, and the item can be traded on a resale platform in the second stage. Speculators have no interests in consumption but incur lower costs in purchasing and reselling processes than consumers. In the scalping model, they buy the item first and resell it later to make profits. In the line-sitting model, they earn incomes by serving as surrogates of consumers in purchasing. We first find whether the two phenomena emerge critically depends on the value of consumers’ entry cost. Our main results indicate that both speculative behaviors can bring benefits to the seller and resale platform by a demand expansion effect, although through different mechanisms. Under scalping, the entry of speculators as additional buyers always boosts demand in both stages, and achieves a win-win outcome for the seller and platform, although less consumers remain in the market and the resale price decreases. Under line-sitting, demand is enlarged and profits rise in both stages, only when consumers find purchasing directly more time- and money-consuming, because they need to pay an extra service fee to speculators. Moreover, the consumer population gets better off from the two speculative behaviors when their entry cost is relatively high. When both models emerge, scalping may be preferable to line-sitting for the seller, resale platform and consumers, if the cost advantage of speculators in resale transactions is more evident.
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The authors thank the editor(s) and referees for their guidance and suggestions that help improve the quality of the paper. This work was partly supported by the National Natural Science Foundation of China under Grant Nos. 71871198, 71821002, 71931009 and 72125004, and the China Postdoctoral Science Foundation under Grant No. 2020M681905.
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Qianqian Chen is a PhD candidate in the School of Management at Zhejiang University. Her research interests include platform economics, revenue management and consumer behavior economics.
Zhenyang Shi is a postdoctoral researcher in the School of Management at Zhejiang University. He received his PhD degree from Antai College of Management and Economics, Shanghai Jiao Tong University. His research interests include inventory management, omnichannel retail operations and sustainable operations management.
Yi Yang is a tenured full professor in the School of Management at Zhejiang University. He obtained his PhD degree from the Department of System Engineering and Engineering Management at The Chinese University of Hong Kong. His main research interests include inventory management, revenue management and operations management. He has published several papers in TOP journals, such as Management Science, Operations Research, Manufacturing & Service Operations Management, and Production and Operations Management, etc. He was named an Distinguished Young Scholars and Excellent Young Scholar by the Natural Science Foundation of China and a Chang Jiang Young Professor by the Ministry of Education in China.
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Chen, Q., Shi, Z. & Yang, Y. Scalping or Line-sitting: The Role of Speculators. J. Syst. Sci. Syst. Eng. 31, 1–33 (2022). https://doi.org/10.1007/s11518-021-5517-1
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DOI: https://doi.org/10.1007/s11518-021-5517-1