On the Choice of Manufacturer's Distribution Channel Strategy Based on Game Theory

Abstract

With the rapid development of E-commerce and network, many manufacturers redesign their distrution channel through adding E-market based on traditional channel. This paper develops the aggregate demand function under dual channel based on consumer utility theory, analyzes the pricing strategy and profit under different channel by using game theory, the result shows when the purchase cost from online is low, manufacturer's optimal channel strategy is dual channnel; when the cost is high, the optimal channel strategy is traditional single channel. Finally the conclusion is approved through numerical illustration.