The Length of Product Line in Distribution Channels
AbstractThis paper studies a manufacturer's optimal decisions on extending its product line when the manufacturer sells through either a centralized channel or a decentralized channel. We show that a manufacturer may provide a longer product line for consumers in a decentralized channel than in a centralized channel if the market is fully covered. In addition, a manufacturer's decisions on the length of its product line may not always be optimal from a social welfare perspective in either a centralized or a decentralized channel. Under certain conditions, a decentralized channel can provide the product line length that is socially optimal, whereas a centralized channel cannot.
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Bibliographic InfoArticle provided by INFORMS in its journal Marketing Science.
Volume (Year): 29 (2010)
Issue (Month): 3 (05-06)
product line; distribution channel; consumer heterogeneity; game theory;
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- Rajagopalan, S. & Xia, Nan, 2012. "Product variety, pricing and differentiation in a supply chain," European Journal of Operational Research, Elsevier, vol. 217(1), pages 84-93.
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