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AbstractAnalyzing carbon emissions is critical for successfully managing sustainable production and consumption. In a dual channel supply chain that includes traditional retailers and online e-tailers, consumer free riding often occurs when consumers enjoy the services provided by a traditional retailer but make purchases at a lower price from an e-tailer. The specific aim of this paper, therefore, is to evaluate the impact of consumer free riding on a product's life cycle carbon emissions across a dual channel closed loop supply chain and to assess the effect of governmental e-commerce tax on carbon emissions. The study comprises a systematic comparison and numerical analysis of cases in which consumers do or do not free ride. Our results show that although manufacturers may gain economic benefits from consumer free riding behavior, total carbon emissions across the supply chain increase too, and a governmental tax on e-commerce can help reduce consumer free riding and total carbon emissions. But in consideration of social welfare maximization, a government may have to subsidize the e-tailer.2
Abstract:The issues of channel conflict and channel power have received widespread research attention, including Geylani et al.'s (2007) work on channel relations in an asymmetric retail setting. Specifically, these authors suggest that a manufacturer can respond to a dominant retailer's pricing pressure by raising the wholesale price for a weak retailer over that for the dominant retailer while transferring demand to the weak retailer channel via cooperative advertising. But, is online expansion another kind of strategic manufacturer's optimal response to a dominant retailer? In this paper, we extend this work by adding a direct online selling channel to illustrate the impact of the manufacturer's internet entry on firms' demands, profits, and pricing strategies and on consumer welfare. Our analysis thus includes a condition in which the manufacturer can add an online channel. If such an online channel is opened, the channelsupported network externality willalways benefit the manufacturer but hurt the retailers. Consumers, however, will only benefit from the network externality when a dominant retailer is present and will be hurt when both retailers are symmetric.
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