Partial outsourcing from a rival: Quality decision under product differentiation and information asymmetry

Mandal, Prasenjit; Jain, Tarun

doi:10.1016/j.ejor.2020.11.018

Cited by 35 publications

(16 citation statements)

References 53 publications

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“…Suppose there are two firms competing in a vertically differentiated market based on quality differences, Baron [32] researched the competitive game of corporate innovation. Mandal and Jain [33] analysed the effect of part outsourcing and quality differentiation on component quality decisions and yield decision through a stylized game-theoretic mode. In our research, the product differentiation is based on cost.…”

Section: Literature Reviewmentioning

confidence: 99%

Effects of Strategic Choices for the Postmerger Manufacturer on Supply Chain Members

Zhang

Zhou

Jiang

2022

Discrete Dynamics in Nature and Society

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To investigate the impact of different strategies adopted by the merged firm on supply chain members, we consider a two-tier supply chain involving two suppliers and multiple manufacturers. Different from most studies, manufacturers, downstream in the supply chain, are asymmetric and produce differentiated products. Due to the differences between products, the postmerger manufacturer can choose focus strategy to generate synergy effect or differentiation strategy to implement price collusion. We give equilibrium results for the supply chain under different strategies. Theoretical analysis shows that for supplier, no matter which strategy is chosen, the price sensitivity for suppliers will increase. Surprisingly, the merger has the opposite effect on the profits of two suppliers under differentiation strategy. Regarding the strategic options after the merger, our research indicates that with the increased substitutability between products, shifting from differentiation strategy to focus strategy should be taken by the postmerger manufacturer. In addition, when focus strategy is chosen and the synergy effect is weak, or when differentiation strategy is chosen and the substitution between products is small, the merger may be beneficial to nonparticipating manufacturers.

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Section: Literature Reviewmentioning

confidence: 99%

Effects of Strategic Choices for the Postmerger Manufacturer on Supply Chain Members

Zhang

Zhou

Jiang

2022

Discrete Dynamics in Nature and Society

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“…Furthermore, many studies also indicate that the supplier, as well as the retailer, could benefit from the introduction of direct channels by mitigating double marginalization problems [1,6,7,21,36,40]. Besides, encroachment is profitable for the supplier and the retailer simultaneously when considering the product durability by a two-period dual-channel model [41], the advertising cost sharing [9], the retailer's store brand [42], the retailer/buyer's strategic inventory [13,43], as well as the low enough quality cost or the moderate product differentiation level [44].…”

Section: Channel Conflict and Coordinationmentioning

confidence: 99%

“…They illustrate that encroachment, even if incurring channel conflict to a certain degree, can alleviate the product competition among firms because supply chain members can sell differentiated products through different channels. Mandal and Jain [44] study critical influences of the product quality differentiation and the partial outsourcing on supply chain channel structures and firms' strategies when the supplier has the ability to encroach.…”

Section: Supplier Encroachment With Various Strategic Factorsmentioning

confidence: 99%

“…These firms implement the nonlinear pricing contract to negotiate about the wholesale price and the quantity bilaterally, meanwhile the revenue sharing contract is also adopted to further coordinate supply chain members' sales revenue. Mandal and Jain [44] incorporate the two-part tariff contract into the partial outsourcing problem in the presence of product quality differentiation when the supplier has the option to compete with the downstream manufacturer.…”

Section: Supplier Encroachment With Various Strategic Factorsmentioning

confidence: 99%

“…Moreover, by using this model, there are many enlightening conclusions and suggestions have been obtained for supply chain management. For example, information management implications in supply chain shown in [2,8,22,23,25,26,61], investment management implications examined in [5,11,21,47,59], and contract mechanism designs investigated in [12,35,44].…”

Section: The Basic Modelmentioning

confidence: 99%

See 2 more Smart Citations

Supplier Encroachment in the Supply Chain in the E-Commerce Age: A Systematic Literature Review

2021

JTAER

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The evolution of e-commerce drives suppliers to develop online direct selling channels to encroach on the retail market, in addition to the traditional distribution channels through the retailer. A systematic literature review (SLR) approach is adopted in this paper to review the existing studies using theoretical models to capture supplier encroachment behavior, as well as the related industry practice phenomena and strategic factors in the supply chain. We present the major research streams according to the selected encroachment literature from two aspects: channel conflict and coordination as well as information structures. We also generalize the significant practical strategies and strategic factors that have been investigated, combined with supplier encroachment, such as investment and spillover effects, the retailer’s store brand introduction, strategic inventory, and contract mechanism designs. More importantly, we summarize the classical theoretical models which include the basic models, the signaling game model, and the Hotelling model, and these have been widely used by scholars to capture the supplier’s encroachment behavior. Finally, we provide several suggestions which may be valuable for researchers to identify future potential research directions.

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On selling format choice and quality differentiation in dual‐channel supply chains

2023

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When suppliers sell products through a direct channel and an indirect channel, they usually differentiate the two channels by quality to alleviate channel conflicts. The quality choice for different channels poses a great challenge to the suppliers, which also bears implications for the online retailer's choice between the reselling format and the agency format. This paper uses a game‐theoretic model to investigate the interaction between the supplier's quality differentiation strategy and the online retailer's selling format choice in dual‐channel supply chains. Different from the previous literature, we endogenize the supplier's quality decisions and find that the supplier always chooses to sell the high‐quality product through the direct channel and sell the low‐quality product through the online retailer. Moreover, compared with the reselling format, the quality level of the low‐quality product is reduced but that of the high‐quality product is lightly increased under the agency format. The intuition is that the supplier tends to highlight the advantage of each channel to acquire more profit. Regardless of the supplier's choice, the online retailer always prefers the agency format. We further extend our model in several important directions, which lend robustness to our core insights.

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Partial outsourcing from a rival: Quality decision under product differentiation and information asymmetry

Cited by 35 publications

References 53 publications

Effects of Strategic Choices for the Postmerger Manufacturer on Supply Chain Members

Effects of Strategic Choices for the Postmerger Manufacturer on Supply Chain Members

Supplier Encroachment in the Supply Chain in the E-Commerce Age: A Systematic Literature Review

On selling format choice and quality differentiation in dual‐channel supply chains

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