Title: Price competition and coordination of dual-channel supply chains

Authors: Chunhua Tang; Taosheng Wang

Addresses: Business College of Hunan International Economics University, Changsha 410205, China ' Business College of Hunan International Economics University, Changsha 410205, China

Abstract: The dual-channel is a more prevalent channel structure in current marketing systems, it including the traditional retail channel and the direct channel through web-based sales. And price competition and channel conflict are inevitable between retail channel and the manufacturer's direct sale channel. This paper develops pricing decisions and coordination models in a one-manufacturer-one retailer dual-channel supply chain. We fully characterise partners' optimal decisions by adopting a customer's utility function. We discuss the optimal decisions in decentralised dual-channel supply chain including market-like setting without revenue sharing contract and contract-like setting, and obtain the optimal prices and quantity decisions in centralised and decentralised dual-channel supply chain. Moreover, we propose the feasible revenue-sharing contracts to coordinate the dual-channel supply chain, and obtain the optimal parameters of the revenue sharing contract. It is always beneficial for both the partners and system to adopt a revenue sharing contract. Finally, the proposed models are further analysed through numerical examples.

Keywords: supply chain coordination; dual-channel supply chains; revenue sharing; contracts; price competition; game theory; decentralisation; marketing systems; supply chain management; SCM; pricing decisions.

DOI: 10.1504/IJNVO.2013.064444

International Journal of Networking and Virtual Organisations, 2013 Vol.13 No.4, pp.297 - 310

Received: 28 Mar 2013
Accepted: 01 Aug 2013

Published online: 06 Sep 2014 *

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