  Uncertainty in quality and the inspectors' imperfect testing capability leave
raw agricultural products (e.g., fresh produce, seafood, livestock and poultry
products, etc.) wide open to economically motivated adulteration (EMA), and the
strong demand for online shopping of these products in China makes this
situation even worse. In this paper, we develop a game-theoretic framework to
investigate online raw agricultural product sellers' preemptive EMA behavior on
an ecommerce platform (EP). Particularly, the sellers differ from each other in
the original quality of their products. We characterize the sellers'
equilibrium pricing and adulteration decisions and the EP's optimal take rate
decision, and analyze how the sampling inspections and adulteration penalty
jointly impact these decisions. Moreover, we investigate three managerial
levers, such as claiming a higher-than-law-requires penalty, that the
administrative departments or the EP can use to deter EMA. Finally, we use the
real-word data from Taobao.com to calibrate our model and derive more
managerial insights from the analytical findings. We find that the heterogenous
sellers' adulteration decisions are symmetric and their ex-post pricing
decisions lead them to evenly share the market on the EP. Interestingly, we
show that the EP's higher take rate will inhibit the sellers' adulteration
behavior. However, the profit-maximizing EP may indulge the sellers'
adulteration behavior by intentionally decreasing this rate. Our results
highlight a penalty-inspection-centered approach as essential to combat EMA,
and the three levels can play a role as supplements to this approach under
certain conditions.
