A dual-channel supply chain model considering supplier’s mental accounting and retailer’s fairness concerns

Abstract

We investigate a dual-channel supply chain with a supplier and a retailer. The supplier has the tendency to open up a direct sales channel because of the e-commerce advantages. We consider the influence of the retailer’s fairness concerns about the new direct sales channel on the optimal decisions and the supplier’s mental accounting on profits gained from both channels. Based on a Stackelberg game model, we analyze the equilibrium prices for each supply chain member. Then, we apply a numerical study to illustrate how the equilibrium prices depend on the extent of the behavior. Our results demonstrate that a retailer’s fairness concerns have no positive influence on increasing its profit; and when consumers highly accept the direct sales channel, it would decrease the retailer’s profit. Moreover, establishing a direct sales channel can diminish the influence of fairness concerns on the supplier’s profit to some extent, and mental accounting will weaken the supplier’s impetus to set up a direct sales channel to deter the retailer.