With the rise of the Internet economy, an increasing number of firms are offering their core products through online platforms, but retail add‐ons directly to consumers. Meanwhile, many online platforms have also started adopting the agency (model) contract, where the upstream firms decide the retail prices of products while the downstream platforms take a predetermined cut from each sale. This study examines the interaction between an upstream firm's add‐on strategy and a downstream online platform's distribution contract choice. We find that such a firm prefers bundling the add‐on and the core product together under the wholesale contract, but prefers retailing the add‐on separately under the agency contract. Our research thus is the first to suggest that the distribution contract can critically affect a firm's choice between add‐on pricing and bundling. On the platform side, we show that a higher commission rate does not always result in a higher profit for the platform under the agency contract. We further identify two conditions under which the platform prefers the agency contract over the wholesale contract: The commission rate for the platform cannot be too low, and the market potential of the add‐on cannot be too large. For the overall channel, we show that the interaction between add‐on pricing and distribution contracts leads to sub‐optimal channel performance. That said, it is possible for both the firm and the platform to obtain higher profits under the agency contract than under the wholesale contract. Finally, we also demonstrate the robustness of our findings under several alternative model specifications.

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R ed packets have symbolized happiness and good luck in Asian culture for centuries. An emerging number of online merchants in Asia are adopting social red packets as a promotion strategy. Social red packets not only digitalize traditional coupons to be readily transferred within consumer social networks but also can reallocate the promotional rewards based on consumers' social network value rather than their personal value to the firm. In this study, we conceptualize social red packets as an implementation of the social promotion framework, where consumers with higher social network value receive better promotional rewards. Leveraging a unique dataset from an online retailing platform, our vector autoregression (VAR) analysis reveals that: (1) under the social red packet design, consumers with higher social network value (who are connected to more new consumers or frequent consumers) will enjoy better promotional rewards; and (2) in order to receive better promotion rewards, consumers under the social red packet design are encouraged to voluntarily enhance their social network value (e.g., by recruiting more new customers or cultivating more frequent consumers). Moreover, we identify several critical characteristics of focal consumers and their social networks that can moderate the effectiveness of social red packets. Our findings provide important managerial insights for online retailing platforms on how to design effective social promotion strategies.

Manufacturers add online direct channels that inevitably engage in channel competition with offline retail channels. Since price is an important factor in consumers' choice of purchasing channel, pricing strategy has become a popular topic for research on dual-channel competition and coordination. In contrast to previous research on pricing strategies based on the full rationality of members, we focus on the impact of retailers' fairness concerns on pricing strategies. In this study, the hybrid dual-channel supply chain consists of one manufacturer with a direct channel who acts as the leader and a retailer who acts as the follower. First, we use the Stackelberg game approach to determine the equilibrium pricing strategy for a fair caring retailer. Simultaneously, we consider a centralized dual-channel supply chain as the benchmark for a comparative analysis of the efficiency of a decentralized supply chain. Furthermore, we study pricing strategies when the retailer has fairness concerns and determine the complete equilibrium solutions for different ranges of the parameters representing cross-price sensitivity and fairness. Finally, through numerical experiments, the pricing strategies, the profit and utility of the manufacturer and retailer, and the channel efficiency of the supply chain are compared and analysed for two scenarios. We find that fairness concerns reduce the manufacturer's profits, while for the most part, the retailers’ profit can be improved; however, the supply chain cannot achieve complete coordination.

We present the potential of ultrathin bilayer metallic nanofilms for use as broadband antireflection coatings in the terahertz frequency range. The metallic layers are modeled using a wave-impedance matching approach. The experimental and theoretical results are in good agreement. Further, a novel method using our broadband antireflection coatings is proposed to eliminate unwanted reflections that interfere with the important reflection from the sample in terahertz reflection measurement. The proposed method significantly improves the calculation of the optical properties of liquid and biological samples.