IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Returns policy, new model introduction, and consumer welfare

Listed author(s):
  • Matsui, Kenji
Registered author(s):

    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.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(09)00370-3
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 124 (2010)
    Issue (Month): 2 (April)
    Pages: 299-309

    as
    in new window

    Handle: RePEc:eee:proeco:v:124:y:2010:i:2:p:299-309
    Contact details of provider: Web page: http://www.elsevier.com/locate/ijpe

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as
    in new window


    1. Brown, Alexander & Chou, Mabel C. & Tang, Christopher S., 2008. "The implications of pooled returns policies," International Journal of Production Economics, Elsevier, vol. 111(1), pages 129-146, January.
    2. Wang, Charles X. & Webster, Scott & Suresh, Nallan C., 2009. "Would a risk-averse newsvendor order less at a higher selling price?," European Journal of Operational Research, Elsevier, vol. 196(2), pages 544-553, July.
    3. Mitchell, Douglas W. & Gelles, Gregory M., 2003. "Risk-value models: Restrictions and applications," European Journal of Operational Research, Elsevier, vol. 145(1), pages 109-120, February.
    4. Kandel, Eugene, 1996. "The Right to Return," Journal of Law and Economics, University of Chicago Press, vol. 39(1), pages 329-356, April.
    5. Hao Wang, 2004. "Do Returns Policies Intensify Retail Competition?," Marketing Science, INFORMS, vol. 23(4), pages 611-613, March.
    6. Howard P. Marvel & Hao Wang, 2007. "Inventories, Manufacturer Returns Policies, and Equilibrium Price Dispersion under Demand Uncertainty," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(4), pages 1031-1051, December.
    7. Lee, Chang Hwan, 2001. "Coordinated stocking, clearance sales, and return policies for a supply chain," European Journal of Operational Research, Elsevier, vol. 131(3), pages 491-513, June.
    8. Kenn Ariga, 1995. "Economics of Japan's Retail Stores," Japanese Economy, M.E. Sharpe, Inc., vol. 23(1), pages 66-96.
    9. Marvel, Howard P & Peck, James, 1995. "Demand Uncertainty and Returns Policies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(3), pages 691-714, August.
    10. Mukhopadhyay, Samar K. & Setaputra, Robert, 2007. "A dynamic model for optimal design quality and return policies," European Journal of Operational Research, Elsevier, vol. 180(3), pages 1144-1154, August.
    11. Bose, Indranil & Anand, Paul, 2007. "On returns policies with exogenous price," European Journal of Operational Research, Elsevier, vol. 178(3), pages 782-788, May.
    12. Xiao, Tiaojun & Choi, Tsan-Ming, 2009. "Purchasing choices and channel structure strategies for a two-echelon system with risk-averse players," International Journal of Production Economics, Elsevier, vol. 120(1), pages 54-65, July.
    13. Xiao, Tiaojun & Yang, Danqin, 2008. "Price and service competition of supply chains with risk-averse retailers under demand uncertainty," International Journal of Production Economics, Elsevier, vol. 114(1), pages 187-200, July.
    14. Buckley, Ian & Saunders, David & Seco, Luis, 2008. "Portfolio optimization when asset returns have the Gaussian mixture distribution," European Journal of Operational Research, Elsevier, vol. 185(3), pages 1434-1461, March.
    15. V. Padmanabhan & I. P. L. Png, 1997. "Manufacturer's Return Policies and Retail Competition," Marketing Science, INFORMS, vol. 16(1), pages 81-94.
    16. Tatsuhiko Nariu, 2008. "Returns Policy, Information, and Communication," Japanese Economy, M.E. Sharpe, Inc., vol. 35(2), pages 54-67.
    17. Anil Arya & Brian Mittendorf, 2004. "Using Return Polices to Elicit Retailer Information," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 617-630, Autumn.
    18. Hing-Ling Lau, Amy & Lau, Hon-Shiang & Willett, Keith D., 2000. "Demand uncertainty and returns policies for a seasonal product: An alternative model," International Journal of Production Economics, Elsevier, vol. 66(1), pages 1-12, June.
    19. Yao, Dong-Qing & Yue, Xiaohang & Wang, Xiaoyin & Liu, John J., 2005. "The impact of information sharing on a returns policy with the addition of a direct channel," International Journal of Production Economics, Elsevier, vol. 97(2), pages 196-209, August.
    20. Dalal, Ardeshir J. & Alghalith, Moawia, 2009. "Production decisions under joint price and production uncertainty," European Journal of Operational Research, Elsevier, vol. 197(1), pages 84-92, August.
    21. Marín-Solano, Jesús & Navas, Jorge, 2010. "Consumption and portfolio rules for time-inconsistent investors," European Journal of Operational Research, Elsevier, vol. 201(3), pages 860-872, March.
    22. Kenji Matsui, 2010. "Effects of wholesaler concentration on retailers by format: evidence from Japanese brand-level price data," Applied Economics, Taylor & Francis Journals, vol. 42(18), pages 2379-2391.
    23. Mantrala, Murali K. & Raman, Kalyan, 1999. "Demand uncertainty and supplier's returns policies for a multi-store style-good retailer," European Journal of Operational Research, Elsevier, vol. 115(2), pages 270-284, June.
    24. Yao, Z. & Leung, Stephen C.H. & Lai, K.K., 2008. "Analysis of the impact of price-sensitivity factors on the returns policy in coordinating supply chain," European Journal of Operational Research, Elsevier, vol. 187(1), pages 275-282, May.
    25. Lau, Hon-Shiang & Lau, Amy Hing-Ling, 1999. "Manufacturer's pricing strategy and return policy for a single-period commodity," European Journal of Operational Research, Elsevier, vol. 116(2), pages 291-304, July.
    26. Tatyana Chesnokova, 2007. "Return policies, market outcomes, and consumer welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 40(1), pages 296-316, February.
    27. Hahn, Kyu Hun & Hwang, Hark & Shinn, Seong Whan, 2004. "A returns policy for distribution channel coordination of perishable items," European Journal of Operational Research, Elsevier, vol. 152(3), pages 770-780, February.
    28. D Flath & T Nariu*, 2000. "Demand Uncertainty And Resale Price Maintenance," Contemporary Economic Policy, Western Economic Association International, vol. 18(4), pages 397-403, October.
    29. Flaten, O. & Lien, G., 2007. "Stochastic utility-efficient programming of organic dairy farms," European Journal of Operational Research, Elsevier, vol. 181(3), pages 1574-1583, September.
    30. Lien, G. & Stordal, S. & Hardaker, J.B. & Asheim, L.J., 2007. "Risk aversion and optimal forest replanting: A stochastic efficiency study," European Journal of Operational Research, Elsevier, vol. 181(3), pages 1584-1592, September.
    31. Choi, Tsan-Ming & Li, Duan & Yan, Houmin, 2004. "Optimal returns policy for supply chain with e-marketplace," International Journal of Production Economics, Elsevier, vol. 88(2), pages 205-227, March.
    32. Archibald, Thomas W. & Thomas, Lyn C. & Possani, Edgar, 2007. "Keep or return? Managing ordering and return policies in start-up companies," European Journal of Operational Research, Elsevier, vol. 179(1), pages 97-113, May.
    33. Flath, David & Nariu, Tatsuhiko, 1989. "Returns policy in the Japanese marketing system," Journal of the Japanese and International Economies, Elsevier, vol. 3(1), pages 49-63, March.
    34. Cindi Fleshman & Jonathan Willner, 2005. "Accounting For Social Costs Associated With Resale Price Maintenance," Contemporary Economic Policy, Western Economic Association International, vol. 23(3), pages 429-435, July.
    35. Yue, Xiaohang & Raghunathan, Srinivasan, 2007. "The impacts of the full returns policy on a supply chain with information asymmetry," European Journal of Operational Research, Elsevier, vol. 180(2), pages 630-647, July.
    36. Gomez-Limon, Jose A. & Arriaza, Manuel & Riesgo, Laura, 2003. "An MCDM analysis of agricultural risk aversion," European Journal of Operational Research, Elsevier, vol. 151(3), pages 569-585, December.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:124:y:2010:i:2:p:299-309. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.