Pricing strategies in a dual-channel green supply chain with cannibalization and risk aversion

With the advent of the era of “New Retail”, many manufacturers and retailers have begun to provide cross-channel return services to increase competitiveness. Our study takes return policy into a green dual-channel supply chain, wherein a manufacturer creates and sells green products simultaneously. We investigate the pricing and greening strategies for the supply chain players in the cases of providing and not providing cross-channel return service by employing the Stackelberg model under the hypothesis of a consistent pricing strategy. By comparing the equilibrium results of two cases, we find that the retailer will cooperate with the manufacturer to employ the cross-channel return policy when the spillover effect is greater than a threshold. Additionally, the green level of products is higher than before. The threshold decreases with consumers’ sensitivity to green products, which implies that the manufacturer is motivated to conduct marketing programs to enhance consumers’ willingness to buy green products. Moreover, we propose a contract to coordinate the supply chain. Finally, we discuss the scenarios if the supply chain implements a differential pricing strategy. Interestingly, the green level and the profits of the whole supply chain are greater than that under a consistent pricing strategy. However, the profits of the retailer are lower than profits in the other scenario, which is not beneficial to creating a stable green supply chain.

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“…Based on Equations (1) and 2, let k = γ + 1, and the demand functions under policy T are (Equations (27) and 28):…”

Section: Extended Discussionmentioning

confidence: 99%

“…3. We only considered the green manufacturing practice to increase product greenness with increasing production costs, which is a common assumption [26,27]. It is different from the scenario of taking lean production and remanufacturing into the supply chain, and the production costs are decreased [28].…”

Section: Model Formulationmentioning

confidence: 99%

A Cross-Channel Return Policy in a Green Dual-Channel Supply Chain Considering Spillover Effect

Zhang

Xia

2020

Sustainability

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“…However, both Zhang et al [8] and Chung and Lee [3] do not consider the horizontal Stackelberg competition. Note that there are some papers investigating price decisions in a dual channel including a traditional channel and an online channel [17]. is paper extends the existing literature but considers the horizontal Stackelberg competition in a dual exclusive channel, which allows us to examine all the possible price leadership scenarios.…”

Section: Literature Reviewmentioning

confidence: 99%

Game Theoretical Perspectives on Pricing Decisions in Asymmetric Competing Supply Chains

Tan

Liu

2020

Discrete Dynamics in Nature and Society

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This paper investigates a dual exclusive channel model in which each manufacturer distributes its goods through a single exclusive retailer, but two goods are substitute. The decision rule between two channels is Nash game in Case 1, while it is Stackelberg game in Case 2. From manufacturer Stackelberg (MS), retailer Stackelberg (RS), and Nash game (VN) theoretic perspectives, nine game models are developed to examine the effect of product substitutability and relative channel status on pricing decisions at both horizontal competition and vertical competition levels. The analysis suggests that the type of price leadership scenarios, the level of product substitutability, and the relative channel status play a significant role in decision making. For instance, in case 1, the symmetric leadership (two manufacturers or two retailers are leaders) is always the dominant strategy and equilibrium for either two manufacturers or two retailers regardless of product substitutability and relative channel status. Nevertheless, the asymmetric leadership may lead channel members to encounter a prisoner’s dilemma if the relative channel status is small. By contrast, in Case 2, the symmetric leadership is not the unique dominant strategy for either two manufacturers or two retailers. In contrast to many earlier results, we also show that whether the first-mover and the late-mover advantages exist, depending on the level of related channel status.

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“…The last two decades of tremendous growth in global e-commerce have witnessed several manufacturers adopting the online channel to achieve growth in revenues, sales, and market share [1][2][3][4][5][6][7]. Several reports show that e-commerce is growing at an impressive pace.…”

Section: Introductionmentioning

confidence: 99%

“…The price differentiation is often implemented through various means including distribution channels, product warranties, and re-saleable returns. Although, price differentiation can yield high profitability, the probability of achieving high profits can be dented by the cannibalization effect or the demand leakages between segments and demand related uncertainties [6,7,21]. The latter can adversely limit the benefit that a firm can reap through price differentiation.…”

Section: Introductionmentioning

confidence: 99%

Price Differentiation and Inventory Decisions in a Socially Responsible Dual-Channel Supply Chain with Partial Information Stochastic Demand and Cannibalization

Raza

2020

Sustainability

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Corporate social responsibility (CSR) has received much of the attention in supply chain management, in particular the pricing decisions. Most existing models that enable CSR integration into pricing decisions in a supply chain context assume deterministic demand and focus on a single distribution channel. Despite the fact that dual-channel supply chain (DCSC) has received popularity, most pricing decisions models in DCSC assume fixed and deterministic market share distribution between channels, and no demand leakages (cannibalization). This paper addresses these gaps by proposing a CSR enabled DCSC model pricing in which the demand is considered to be stochastic and market share distribution between channels in DCSC is optimally determined using a differentiation price, and the impact of demand leakages is also taken into consideration. Unlike existing studies, which only enable pricing decisions due to deterministic demand consideration, comprehensive DCSC models are proposed that provide joint decisions framework on CSR investment, pricing, and inventories. We have also considered the extension of the demand scenario when the distribution of demand is unknown. The two most common coordination schemes, the centralized (integrated) and the decentralized coordination is explored for the three demand situations: (i) deterministic demand; (ii) stochastic with full information; and (iii) stochastic with partial information. We are able to find analytical (closed-form) solutions for most demand situations. The centralized coordination performed better compared to the decentralized for all demand scenarios. The models are benchmarked when the demand is stochastic with known and unknown distributions, as well as, the case of the deterministic demand. A detailed numerical analysis is also presented in order to study the impact of using the price differentiation for market segmentation, the demand leakage, and partial knowledge on the stochastic demand on the players’ decisions and revenues in the supply chain.

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Pricing strategies in a dual-channel green supply chain with cannibalization and risk aversion

Cited by 44 publications

References 86 publications

A Cross-Channel Return Policy in a Green Dual-Channel Supply Chain Considering Spillover Effect

A Cross-Channel Return Policy in a Green Dual-Channel Supply Chain Considering Spillover Effect

Game Theoretical Perspectives on Pricing Decisions in Asymmetric Competing Supply Chains

Price Differentiation and Inventory Decisions in a Socially Responsible Dual-Channel Supply Chain with Partial Information Stochastic Demand and Cannibalization

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