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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.
Liu et al. (Fri,) studied this question.