The Impact of Consumers’ Peer-Induced Fairness Concerns on Mixed Retail and E-Tail Channels

Abstract

With the rapid development of e-commerce, online retailing has become an important part of the market. In order to improve market competitiveness and increase market share, more and more retailers have opened both regular offline channel and online e-tail channel to sell products. Then how to price becomes an urgent problem for upstream manufacturers and dual-channel retailers when there is price competition between regular channel and e-tail channel, especially when consumers have peer-induced fairness concerns. However, linking consumers’ behavioral factors such as fairness concerns to pricing decisions of mixed retail and e-tail channels draws little attention in the literature on supply chain management. This paper incorporates “consumers’ peer-induced fairness concerns” (CPFC) into pricing decisions in a dyadic supply chain, where dual-channel retailer obtains products from manufacturers and then sells products to consumers through both regular channel and e-tail channel. We use game-theoretic models to analyze the equilibrium pricing strategies under the setting with “symmetry consumers’ peer-induced fairness concerns” (SCPFC) and with “asymmetry consumers’ peer-induced fairness concerns” (ACPFC), respectively. Detailed comparisons and numerical analysis are further conducted to examine the impacts of different types of CPFC on equilibrium pricing strategies and profits.

Research on contract coordination of supply chain under dual behavior preference based on Stackelberg model

“…In manufacturing-oriented supply chain management, the weak members' tend to pay attention to fairness which make them seize the profits from other member to increase their income distribution [45] . Huang(2015) and Xue(2018) researched the retailer-led supply chain management with fairness preference by establishing models and numerical analysis, she concluded that the profit and performance of the supply chain system changed with fairness concerns of suppliers and retailers [54,57,59] . The coordination problem of supply chain with suppliers having preference, which concluded that suppliers with dual preferences can effectively regulate supply chain coordination [48,58] .…”

Impact of Retailer’s Vertical and Horizontal Fairness Concerns on Manufacturer’s Online Channel Mode

“…Denote π m , π r , π e and U r as the profits of the manufacturer, retailer, e-commerce platform, and retailer's utility, respectively. Under the manufacturer or retailer direct selling mode, the retailer's vertical fairness concerns about the manufacturer's profit are considered, and the utility function is assumed to be U r � π r − λ(π m − π r ) [15,16,46,51,52], where λ(0 < λ < 1) is the vertical fairness concern coefficient. Under the e-commerce platform agency selling mode, the retailer's vertical fairness concerns about the manufacturer's profit and the horizontal fairness concerns about e-commerce platform's profit are considered, and the utility function is U r � π r − λ(π m − π r ) − c(π e − π r ) [40,46,53], where c(0 < c < 1) is the horizontal fairness concern coefficient.…”