The effects of demand uncertainty on channel structure

Cao, Wei; Jiang, Bo; Zhou, Deming

doi:10.1016/j.ejor.2010.06.001

Cited by 23 publications

(9 citation statements)

References 12 publications

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“…Many researchers extended the above mentioned studies by adding other dimensions such as managerial incentives (Bhardwaj and Balasubramanian, 2005), non-price competition (Zhao et al, 2009;Liu and Tyagi, 2011;Wang et al, 2011;Zhang et al, 2012;Zhou and Cao, 2014), risk aversion (Xiao and Choi, 2009), number of players (Anderson and Bao, 2010), demand uncertainty (Cao et al, 2010). Considering managerial incentives, Bhardwaj and Balasubramanian (2005) demonstrated that an asymmetric channel structure with one integrated manufacturer and the other decentralized manufacturer arises in equilibrium.…”

Section: Literature Reviewmentioning

confidence: 99%

Distribution channel strategies in a mixed market

Bian

Guo

2015

International Journal of Production Economics

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a b s t r a c tThis paper studies equilibrium channel strategies in a mixed market with a public firm and a private firm. The public firm is concerned with social welfare, while the private firm aims to maximize its own profit. Each firm decides whether to adopt an integrated or a decentralized channel. We examine two standard market competition modes, Bertrand and Cournot. Within each competition mode, we consider two typical vertical contracts, wholesale-price and two-part tariff contracts. Our results suggest that equilibrium channel structures depend on the market competition mode, the vertical contract form, and the level of product substitutability. Specifically, the channel strategy of the private firm depends mainly on the vertical contract form: under a two-part tariff contract, the private firm always chooses decentralization; under a wholesale-price contract, the private firm chooses integration for most scenarios except for highly substitutable products under Bertrand competition (i.e., under very intense competition). The channel strategy of the public firm depends mainly on the competition mode: under Bertrand competition, the public firm always chooses decentralization; under Cournot competition, the public firm always chooses the opposite of the private firm's strategy.

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Section: Literature Reviewmentioning

confidence: 99%

Distribution channel strategies in a mixed market

Bian

Guo

2015

International Journal of Production Economics

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“…Xia and Zhang (2010) find that adding an Internet channel can enable a company to expand their markets. Cao, Jiang, and Zhou (2010) discover that demand uncertainty plays an important role in affecting the competing manufacturers' decisions on channel structure.…”

Section: Channel Structure Choicementioning

confidence: 99%

Demand information sharing and channel choice in a dual-channel supply chain with multiple retailers

Ming

Liu

Deng

et al. 2014

International Journal of Production Research

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In this paper, under a dual-channel supply chain consisting of a manufacturer and multiple retailers, we investigate vertical and horizontal information sharing in different channel structures and the manufacturer's choice on whether or not to keep a direct channel. To this end, we first study the dual-channel structure where uncertain demand is a linear function of price with a generalised-distribution base demand and show that the retailers have incentives to share information horizontally but not vertically, while the manufacturer is better off with vertical information sharing but its expected profit is not affected by horizontal information sharing. We next examine the retail-channel structure and find the basic results remain unchanged. Finally, we provide closed-form internal and external conditions under which the manufacturer can benefit from owning a dual-channel structure. Our study extends the existing literature by combining information sharing and dual-channel choice, introducing channel difference, discussing the impact of channel structure on horizontal and vertical sharing as well as providing interesting managerial insights for channel choice.

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“…Zhao et al (2009) examine how the structure of distribution channels may influence firms' quality and price strategies, and find that the high-quality manufacturer suffers more from decentralisation and the low-quality manufacturer actually receives greater profits when both channels are decentralised. Cao et al (2010) examine the distribution channel choice of competing manufacturers under demand uncertainty and resale price maintenance. In the above papers, all manufacturers share equal or balanced decision-making power and adopt complete information game.…”

Section: Introductionmentioning

confidence: 99%

Equilibrium analysis of distribution channel structures under power imbalance and asymmetric information

Zhou

Wang

2013

International Journal of Production Research

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This paper investigates the problem of channel choice game in two power-imbalanced supply chains consisting of the leader supply chain and the follower supply chain. We assume that there exists symmetric and asymmetric cost information between the two supply chains, and that the two chains as well as the two members in each chain follow the Stackelberg game setting. We analyse four competition scenarios: both chains are decentralised, where individual members of both supply chains maximise their own profits by independently selecting their price policies; both chains are integrated, where manufacturers and retailers coordinate their decisions to maximise supply chain profits; the leader chain is decentralised and the follower integrated; the leader is integrated and the follower decentralised. The primary objective of this paper is to investigate the influence of power imbalance, information asymmetries, and the degree of product substitutability under channel choice equilibrium. We find that, in contrast to earlier literature where all manufacturers share equal or balanced decision-making power, an integrated distribution channel is the dominant strategy for the leader under symmetric and asymmetric information Stackelberg game. As the degree of product substitutability increases, the follower will gradually switch from integrated distribution channel to decentralised distribution channel; the follower can gain from constructing a decentralised distribution channel as the prediction accuracy of the leader increases.

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The effects of demand uncertainty on channel structure

Cited by 23 publications

References 12 publications

Distribution channel strategies in a mixed market

Distribution channel strategies in a mixed market

Demand information sharing and channel choice in a dual-channel supply chain with multiple retailers

Equilibrium analysis of distribution channel structures under power imbalance and asymmetric information

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