Abstract
This paper considers a retailer-manufacturer dual-channel supply chain (DCSC) consisting of a retail channel and a direct sale channel. Previous literature has shown that either asymmetric reference effect (ARE) or information sharing (IS) significantly impacts customers’ demand, then the channel members’ pricing decisions. As yet, no literature has examined the joint effect of both on the channel members’ pricing decisions, especially in a DCSC. To fill up the deficiency, we first explore and compare the pricing decisions in a centralized and a decentralized DCSC with ARE, respectively, with and without IS, using the Stackelberg game and two-stage optimization technique. Then we evaluate the values of ARE and IS by introducing model misspecification and numerical experiments. We find that substantial revenue will be lost if the retailer ignores ARE when information is shared than not shared, especially when the channel members are pessimistic about the market. A higher reference price or a weaker ARE induces the channel members to increase prices, and make IS more valuable to them. Besides, whether the information is shared or not, channel members generally underestimate revenues under a relatively high reference price, while overestimating the revenues under a relatively small reference price. Furthermore, the manufacturer conditionally accepts the IS while the retailer always accepts it.
Highlights
As the Internet information technology develops rapidly, modern customers are increasingly accustomed to shopping online, which induces many manufacturers to add a direct sale channel as a strategy to attract customers and improve profits
This paper focuses on exploring the optimal pricing decisions with asymmetric reference effect (ARE) and information sharing (IS) in a dual-channel supply chain
One research purpose of this paper is to explore the value of sharing the market information between the two players to a dual-channel supply chain (DCSC), and we analyze the problem in the following two cases: (i) Non-information sharing (NI): the retailer knows the full information about the market size, whereas the manufacturer just knows the partial information about the market size; (ii) Information sharing (IS): the retailer is willing to share the market information with the manufacturer, but a contract or a commitment exists between them, i.e., once the manufacturer accepts the information, she must pay a certain fee to the retailer
Summary
As the Internet information technology develops rapidly, modern customers are increasingly accustomed to shopping online, which induces many manufacturers to add a direct sale channel as a strategy to attract customers and improve profits. In this paper we jointly consider ARE and IS in a DCSC, the topic is motivated by the fact that both of these two factors significantly influence customers’ demand, the channel members’ pricing decisions and revenues. It is widely cognized that two key elements impact consumers’ purchasing behaviors profoundly in a supply chain, one is the consumers’ individual behaviors, e.g., reference behaviors, social learning, strategic behaviors, etc; the other is the retailers’ policies, e.g., demand learning, price guarantee, revenue-sharing contract, etc Considering these two elements are more in line with the actual situation, and it has been widely studied in the existing literature (e.g., [2, 37]).
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