Channel Dynamics Under Price and Service Competition

Abstract

This paper studies a distribution system in which a manufacturer supplies a common product to two independent retailers, who in turn use service as well as retail price to directly compete for end customers. We examine the drivers of each firm's strategy, and the consequences for total sales, market share, and profitability. We show that the relative intensity of competition with respect to each competitive dimension plays a key role, as does the degree of cooperation between the retailers. We discover a number of insights concerning the preferences of each party regarding competition. For instance, there will be circumstances under which both retailers would prefer an increase in competitive intensity. Our analysis generalizes existing knowledge about manufacturer wholesale pricing strategies, and rationalizes behaviors that would not be evident without both price and service competition. Finally, we characterize the structure of wholesale pricing mechanisms that can coordinate the system, and show that the most commonly used formats (those that are linear in the order quantity) can achieve coordination only under very limiting conditions.channels of distribution, supply chain management, coordination, competition, pricing, service levels, manufacturing/marketing interface

Game Analysis of Low Carbonization for Urban Logistics Service Systems

“…Such an effort, obviously, belongs to non-price element. It is often supposed to be nonlinearly related to market demand, just the same as Savaskan et al and Tsay et al [7,8] . Generally speaking, the low-carbon levels of a distribution system shall rise gradually as policy guidance of governments and public environmental consciousness are strengthened.…”

“…Substitute equation (8)(9) for corresponding variables in the equation (5), now we get its first-order and second-order derivates to m2.…”

“…As the Scenario 2, firstly, partial derivates of equation (4) are solved to get equation (8)(9). Then as in the Scenario 1, equation (7) is obtained by solving derivates of equation (5).…”

“…Equation (4) is concave in variable m1. Let its first-order partial derivate equal to 0 to get equation (8). Next, as in Scenario 1, we solve the derivate of equation (5) to m2 to get equation (7).…”

“…Next, as in Scenario 1, we solve the derivate of equation (5) to m2 to get equation (7). And then Combining equation (7)(8) Put it back into above expression of m1 and m2, the optimal solutions of them are…”