Gray market's product quality in the circular economy era

Cao, Qingning; Zhang, Jianqiang

doi:10.1080/00207543.2019.1638980

Cited by 29 publications

(27 citation statements)

References 49 publications

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“…ey confirm that these measures are valid, while the activities will also relieve the dual marginal effect and boost participants' revenue. Countering the traditional belief, Cao and Zhang [30] argue that gray distribution induces MNMs to improve product quality when both markets approach WTP. e analysis also illustrates that retailers in both high-and lowprice markets have incentives to pursue PI activities.…”

Section: Literature Reviewmentioning

confidence: 99%

Effects of Parallel Importation and Power Structures on Price Competition in Duopolistic Supply Chains

Rong

Chen

et al. 2021

Mathematical Problems in Engineering

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Multinational manufacturers (MNMs) achieve significant gains from product quality and reputation in entering emerging markets while facing many operational risks, such as parallel importation (PI) and market power structures. This paper focuses on a duopolistic supply chain consisting of one MNM and one local manufacturer (LM) in an emerging market with low willingness-to-pay (WTP). Within the game analytical framework, we consider different market power structures and investigate the impact of PI on the manufacturers’ price competition, and we further discuss the MNM’s countermeasures in high and low WTP markets. We find that PI does not occur when the WTP ratio is below the threshold or the transaction cost is high. Power structures significantly affect the participant’s profitability, the LM’s gains are maximized if the MNM fully dominates the market, and the MNM loses the minimum if the LM exclusively rules the market. When in codominant structure, the parallel importer achieves maximum gains while the MNM’s profits rise in the market WTP ratio interval. PI activities boost the benefits for the LM and the parallel importer, whereas increasing transaction costs diminish those effects and promote the MNM’s profitability. PI promotes or deters price competition in duopolistic supply chains depending on power structures. In addition, increasing either the level of product substitution or quality perception restrains PI and improves the LM’s earnings, but the latter expands the MNM’s losses.

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Section: Literature Reviewmentioning

confidence: 99%

Effects of Parallel Importation and Power Structures on Price Competition in Duopolistic Supply Chains

Rong

Chen

et al. 2021

Mathematical Problems in Engineering

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“…It arises when "official" intermediaries of prestige goods decide to sell outside of their usual distribution channel, whether it be geographical (Bergen et al, 1998) or based on the categorization of the client (B2B, B2C) (Dutta et al, 1999) (Figure 1). With this opportunistic behavior, the gray market distributors or intermediaries seek additional income to that assigned during the process of market segmentation carried out by the manufacturer or brand owner (Cao & Zhang, 2020). This type of business is more often found in the distribution channels of fast-moving consumer goods, where the presence of a prestige good which standardizes the product means that it does not matter if it is supplied through one channel or another (Johnson & Sohi, 2016), with the decision variables being price (Gudigantala & Bicen, 2019) and availability (Antia et al, 2006).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Participation of SME distributors in the gray market: An empirical analysis of Spanish firms

Arias¹

2021

SBIR

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Within the distribution channels of fast-moving consumer goods (FMCG), the negotiating of agreements with official suppliers is critical for the performance of small and medium-sized (SME) distributors. These distributors are limited by their size and negotiating power, which is significantly lower than that of their suppliers, leading them to seek alternative supply sources, such as that provided by the gray market. The participation of SME distributors in the gray market is not only conditioned by the negotiations with their official suppliers, but also by the role played by the size of the gray market and by the relationship with their suppliers. The literature shows very few studies into SMEs within this area of the distribution channel, so this article contributes an explanatory model of this phenomenon. Based on a sample of 181 Spanish distribution companies, our results confirm that negotiation is a favorable element, while granting limited importance to the role of the relationship. In addition, we find evidence of the key role of commitment between parties in a situation as peculiar as that of parallel marketing channels.

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“…The extant literature in the area of the gray market supply chain has come up with valuable research topics of interest, including the attitude of the government and brand owner on the gray market (Roy and Saggi, 2012), the causes of the gray market (Richardson, 2002; Maskus and Chen, 2004), the impact of the gray market on node enterprises of the supply chain (Li, 2006), gray market and counterfeiting in supply chains (Wang et al , 2020), gray market’s product quality in the circular economy (Cao and Zhang, 2020), or consumer decision-making styles for gray luxury goods (Rojanasingsawad et al , 2020). However, as indicated by Ahmadi et al (2015), there is still a scarcity of literature on interfaces between gray markets and supply chain, which is key given today’s scenarios.…”

Section: Literature Reviewmentioning

confidence: 99%

Arbitrage in gray markets and its impact on supply chain decisions

Yao

Foropon

Wang

et al. 2020

JEIM

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PurposeThe purpose of this paper is to investigate the impacts of different gray markets’ structures on both supply chain decisions and associated profits.Design/methodology/approachWithin the context of gray markets, using game theory approach in this paper, supply chains have been considered as assets of manufacturers, distributors and speculators, within which manufacturers sell products to distinctive markets either directly or through authorized distributors, while speculators buy products from a lower price market and then sell them in a higher price market. Our study has examined different decision variables within such a framework.FindingsConsidering a situation where one manufacturer sells its products either directly in one market (Market 1) or through its authorized distributor (Market 2), due to different products prices in both markets, results have shown that, when market elasticity is less than its critical value, a speculator can sell a gray market product arbitrage in market 2, whereas when the market elasticity is greater than its critical value, a speculator can sell a gray market product arbitrage in market 1. In addition, manufacturers—as leaders of Stackelberg game—are always the most profitable stakeholders within a gray market supply chain.Practical implicationsIn this study, equilibrium results for each market have been obtained, optimal results have been compared, and accordingly, valuable insights have been developed. Such results would help managers to take better managerial decisions, as well as strategizing policies in gray markets.Originality/valueIn this paper, we have considered a gray market where both distributors and speculators exist and act as parallel channels. To the best of our knowledge, the extant literature focuses either on distributors or speculators, but never concurrently on both. In fact, the coexistence of one distributor and one speculator in a gray market will impact their own decisions, as well as both decisions and profits of other stakeholders, and hence, will exert an impact on the manufacturer side.

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Gray market's product quality in the circular economy era

Cited by 29 publications

References 49 publications

Effects of Parallel Importation and Power Structures on Price Competition in Duopolistic Supply Chains

Effects of Parallel Importation and Power Structures on Price Competition in Duopolistic Supply Chains

Participation of SME distributors in the gray market: An empirical analysis of Spanish firms

Arbitrage in gray markets and its impact on supply chain decisions

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