Abstract
A two-level dual-channel supply chain model was established in which retailer had his own direct channel. Game model was constructed based on two cases of decentralized and centralized decision-making. Pricing strategies of manufacturer and retailer were studied. Impacts of different channel and different sale entities on manufacturer and retailer were examined. Results show that when channel substitution increases and market share of retailer direct channel is small, retailer should choose to give up direct channel and focus on retail channel sales and take direct channel as means of propaganda and brand promotion. When the difference of sale entities reduces, consumers can get more surplus.
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