Game Theory Analysis on Price Competition between E-Commerce Platforms in Southeast Asia

Abstract

The rapid development of e-commerce in Southeast Asia, particularly with Shopee, fosters the dynamics of oligopoly competition based on discount strategies. This study examines Shopee's internal processes in establishing, adjusting, and evaluating discount policies through a data-based approach and market response. This study aims to analyze price competition between e-commerce players in Southeast Asia through the lens of Game Theory, with a specific focus on Shopee’s internal processes in establishing, adjusting, and evaluating discount policies through data-driven approaches and market responses. The methods used include monitoring competitor trends, analyzing sales data, and simulating various pricing scenarios. The results show a strong correlation between the aggressiveness of discounts and a surge in transaction volume and new user registrations. The implementation of high discounts, particularly in conjunction with free shipping promotions, has proven effective in driving user loyalty and expanding market share. However, the risk of price wars and declining profit margins remains a strategic challenge. These findings have significant implications for e-commerce management, suggesting that adaptive discount strategies are essential to sustain growth amid intense market competition.