Abstract
This paper investigates a supply chain management problem concerning whether a manufacturer should apply exclusive territories of sales when the manufacturer can distribute products through dual‐channel supply chains. We first demonstrate that even when a manufacturer cannot use the direct channel, the adoption of the exclusive territories can be optimal. One noteworthy result is that when a manufacturer can use dual channels, the adoption of exclusive territories can boost manufacturer's profit even if the products are more differentiated between manufactures than when the manufacturer can use only a single retail channel. These results provide useful insights for manufacturers.
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