Coordination and price competition in duopoly distribution channels
by Santanu Sinha, S.P. Sarmah
International Journal of Integrated Supply Management (IJISM), Vol. 5, No. 2, 2009

Abstract: This paper investigates the issues of price competition and channel coordination when two different sellers compete to sell differentiated products through their exclusive retailers. The demand of a product depends not only on its own price, but also on the price of the other. Mathematical models have been developed to analyse the coordination scenarios under different channel structures, such as when (1) both the channels are decentralised, (2) one of the channels is decentralised while the other one is centralised, (3) both the channels are centralised and (4) global coordination exists. It is observed that in some cases, competition serves the firms better than perfect coordination. Furthermore, it is shown that efficiency of competition and coordination exclusively depends on the product type, degree of product differentiation, channel structure and the number of distribution channels in the market.

Online publication date: Sun, 22-Nov-2009

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