A collaborative management of social commerce deals: Decisions on pricing and commission rate with a capacity consideration

Because social commerce‐based deal promotions are such a recent development, it is very challenging for local merchants to make informed decisions in regard to pricing and the number of coupons to sell. This study develops a collaborative decision model based on different perspectives and interests of social intermediaries and social merchants to increase the total profit for them. This study empirically derives a demand function for health service providers and incorporates it into the proposed decision model. The model is extended to capture a lifetime value of discount deals and operationalized with an illustration. A sensitivity analysis provides valuable insights into the dynamics of collaborative deal promotions.