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Returns policy, new model introduction, and consumer welfare

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  • Matsui, Kenji

Abstract

This paper investigates how economic outcomes differ for new model introduction between two extreme contracts: outright sales contract and returns policy contract with full credit. Under the outright sales contract, we show that the retailer's incentive to introduce a new model can lead to a reduction of consumer welfare when the retailer is moderately risk averse. The primary conclusion from this study is that the returns policy contract resolves this conflict between firms and consumers, and that the supply chain introduces the new model only when consumer surplus from the new model is higher than that from the old model.

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  • Matsui, Kenji, 2010. "Returns policy, new model introduction, and consumer welfare," International Journal of Production Economics, Elsevier, vol. 124(2), pages 299-309, April.
    • Handle: RePEc:eee:proeco:v:124:y:2010:i:2:p:299-309
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    8. Ohmura, Shota & Matsuo, Hirofumi, 2016. "The effect of risk aversion on distribution channel contracts: Implications for return policies," International Journal of Production Economics, Elsevier, vol. 176(C), pages 29-40.
    9. Man Li Rita Yi & Yu Li Herru Ching & Mak Cho Kei & Chan Po Kei, 2016. "Rationales for the Implementation of Competition Law in EU, the US and Asia: Content Analysis and Data Visualization Approach," Asian Journal of Law and Economics, De Gruyter, vol. 7(1), pages 63-100, April.

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