Abstract:The two main reasons consumers return products during online shopping are quality defects and product mismatch. Enhancing product quality and incorporating augmented reality (AR) technology can help reduce return rates. Theoretically, AR technology should aid consumers in making better product matches during online shopping; however, in practice, it may lead to a decline in product quality. To address this, we establish a Stackelberg game model to investigate the impact of AR technology adoption by manufacturers and e-commerce platforms on product quality under different sales models. Numerical experiments are conducted to compare the effects of AR technology adoption on product quality, profits of platforms and manufacturers, consumer surplus, and social welfare across different models. The results indicate that, while AR technology in online shopping can mitigate mismatched product returns, it also leads to a decline in product quality. This quality reduction is more pronounced under the resale model than in the agency model, highlighting the importance of quality control when adopting AR technology. Furthermore, in the agency model, the application of AR technology can effectively enhance consumer surplus and social welfare when the product return rate is low.