A Research on the Pricing Strategy and Channel Selection of Online Retailers with Effort Level

doi:10.3969/j.issn.1007-7375.2021.01.001

Abstract

Abstract: A study is conducted on the optimal strategy of supply chain under three markets composed of two competitive retailers. By considering online retailers making great efforts to sell self-operated products, both e-retailers' equilibrium strategies are found. It shows that agency selling weakens the negative effects of double marginalization from reselling and leads to lower retail prices. E-retailers prefer agency selling when the base demand of joint products is close to that of self-operated products. When the base demand of joint products is low or medium, online retailers can benefit from choosing reselling. Results indicate that, the selection of selling formats by e-retailers is mostly what the manufacture prefers. The market equilibrium structure conflicts with the manufacturer's preference equilibrium structure mainly because manufacturers have a free-riding behavior.

Key words: online retailers, effort level, pricing strategy, channel selection, game theory

CLC Number:

LIU Dun, SONG Huiling, NIE Jiajia. A Research on the Pricing Strategy and Channel Selection of Online Retailers with Effort Level[J]. Industrial Engineering Journal, 2021, 24(1): 1-9,18.

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