Abstract: In the dual channel supply chain composed of a manufacturer, a traditional retailer and a 3PL enterprise, the manufacturer is dominant and has capital constraints. The traditional retailer and 3PL enterprise provide transportation services for the traditional channel and the direct channel respectively. A Stackelberg game model is constructed and three situations compared and analyzed: the manufacturer having no capital constraints, financing from the retailer and financing from the 3PL enterprise. The pricing and internal financing decision of dual channel supply chain are discussed. The results show that: when the transportation service cost is high, manufacturers always choose to finance from 3PL enterprises; when the transportation service cost is low, if the direct channel market share is high, manufacturers tend to finance from 3PL enterprises; if the direct channel market share is low, manufacturers tend to finance from retailers.

Key words: dual channel, supply chain, capital constraint, 3PL(third-party logistics), internal financing