Manufacturer encroachment with advertising

Zhang, Jianqiang; Cao, Qingning; He, Xiuli

doi:10.1016/j.omega.2018.12.002

Cited by 101 publications

(65 citation statements)

References 46 publications

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“…Our study also falls into the literature on manufacturer encroachment (Chiang et al, ; Tsay & Agrawal, ; Arya et al, ; Li et al, ; Guan et al, ; Zhang et al, ). This research studies the effect of encroachment on firms' performance.…”

Section: Literature Reviewsupporting

confidence: 58%

“…Our study contributes to the literature on information disclosure in distribution channels (e.g., Guo, ; Guo & Zhao, ; Guan & Chen, ; Zhao, Wang, & Gan, ; Guan & Chen, ; Lan, Peng, Wang, & Gao, ; Zhang, Cao, & He, ; Zhao, Dong, & Cheng, ). This stream of literature primarily studies how much information firms should disclose to consumers and examines the impact of disclosure cost on firms' optimal disclosure incentives and ex ante payoffs in a supply chain setting.…”

Section: Literature Reviewmentioning

confidence: 69%

“…For example, Guo and Zhao () and Lan et al () study how competition could influence firms' incentive to voluntarily reveal quality information in a duopoly and show that firms disclose less information in competitive markets. In contrast, Zhang et al () study strategic information disclosure for an intermediary and two competitive sellers and derive a different result that competition leads to more information disclosure. Guan and Chen () explore the strategic interaction between manufacturer's information acquisition and quality disclosure.…”

Section: Literature Reviewmentioning

confidence: 98%

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Manufacturer product quality information disclosure with channel encroachment in the E‐commerce age

2020

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This study investigates the interplay between a manufacturer's quality disclosure and channel encroachment. We show that there exists a U-shaped pattern between the manufacturer's payoff and the disclosure cost, whereas the retailer's payoff exhibits a more complicated and nonmonotonic relationship with respect to the disclosure cost. Both firms may benefit from the increase of the disclosure cost when it falls into the intermediate range and when the channel substitution rate is not too low. The increase of the encroachment cost always hurts the manufacturer, and it may even hurt the retailer if it is medium and if the channel substitution rate is low.

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Section: Literature Reviewsupporting

confidence: 58%

Section: Literature Reviewmentioning

confidence: 69%

Section: Literature Reviewmentioning

confidence: 98%

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Manufacturer product quality information disclosure with channel encroachment in the E‐commerce age

2020

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“…However, all the above‐mentioned studies consider models without upstream or manufacturer advertising. The literature on advertising (Grossman & Shapiro, 1984; Soberman, 2004; Zhang et al, 2020, 2012) allows firms to sell differentiated products and does not consider endogenous timing game.…”

Section: Introductionmentioning

confidence: 99%

Endogenous timing and manufacturer advertising: A note

Mizuno

2020

Metroeconomica

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Under Bertrand competition, sequential pricing weakens competition and provides larger profits than those with simultaneous pricing. In contrast, under Cournot competition, simultaneous play is less competitive than sequential play. Therefore, sequential pricing occurs in equilibrium under Bertrand competition, whereas simultaneous play is an equilibrium under Cournot competition (Hamilton & Slutsky, 1990). This study challenges both well-known results by introducing upstream advertising.More formally, we consider a simple four-stage game played by a manufacturer and two retailers producing differentiated products. In the first (pre-play) stage, retailers play observable delay game (Hamilton & Slutsky, 1990). In the second stage, the manufacturer invests in advertising that affects the size of retailers' markets. In the third stage, the manufacturer sets the wholesale price. In the final stage, retailers set unit prices under Bertrand competition (quantities under Cournot competition) either simultaneously or sequentially, depending upon their moves in the first stage.

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“…However, if the retailer is a quite powerful party in the market, it can determine or influence the manufacturer's channel configuration strategy indirectly. For example, Home Depot declared that it would not do business with manufacturers who build direct channels (Zhang, Cao, & He, 2020). When iPhone entered the Chinese market in 2009, it was required to sell products only through China Unicom, the one of three giant telecom companies in mainland China.…”

Section: Introductionmentioning

confidence: 99%

Channel configuration in a complementary market under different power structures

Mao

Guan

et al. 2020

Naval Research Logistics

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This paper investigates the impact of channel selection power on the firms' channel configuration strategies in a market with two upstream manufacturers providing complementary products and one downstream retailer who can resell the products. Each manufacturer can sell its product either directly by incurring a selling cost or indirectly via the retailer, in which the decision is further dependent on the relative channel selection powers between itself and the retailer. We investigate three scenarios depending on the possible power structures among the firms and show that the equilibrium channel configuration strategy hinges highly on the channel selection power, the direct selling cost and the degree of complementarity between the two products. The manufacturer may prefer direct selling when it is more powerful than the retailer and both the direct selling cost and the degree of complementarity are relatively low. However, when the degree of products' complementarity is sufficiently high, a manufacturer would not choose direct selling even though there is no direct selling cost. We also show that a stronger channel selection power does not necessarily benefit but may occasionally hurt a manufacturer's profitability. For the manufacturer who does not have channel selection power before, the enhanced channel selection power endows it with more selling options but also encourages the leading manufacturer (who already has the channel power) to design a more aggressive channel configuration strategy that only benefits itself but hurts the others.

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Manufacturer encroachment with advertising

Cited by 101 publications

References 46 publications

Manufacturer product quality information disclosure with channel encroachment in the E‐commerce age

Manufacturer product quality information disclosure with channel encroachment in the E‐commerce age

Endogenous timing and manufacturer advertising: A note

Channel configuration in a complementary market under different power structures

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