Abstract
Abstract In this paper, we consider that customers differ in their channel preference when facing multiple shopping channels. We focus on research shoppers who do not have a particular preference for either channel and are likely to become free-riders. To explore the influence of free-riding behavior, we build profit models with and without free-riding and compare the optimal solutions under the two scenarios. We find that free-riding can contribute to an increase in the total market demand by affecting members’ pricing decisions. However, it makes a divisional effect on the offline demand and intensifies channel conflict, which finally benefits the manufacturer but undermines the retailer’s profit. To solve this contradictory situation, we propose a cooperative strategy. We find that the cooperative strategy can effectively remove the negative influence of free-riding and make both members achieve Pareto improvements. Numerical examples are presented to show the effectiveness and feasibility of the cooperative strategy.
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