IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i5p4087-d1078467.html
   My bibliography  Save this article

Pricing Decision Models of Manufacturer-Led Dual-Channel Supply Chain with Free-Rider Problem

Author

Listed:
  • Xuelong Zhang

    (School of Economics and Management, Guangxi Normal University, Guilin 541004, China)

  • Yuxin Xu

    (School of Economics and Management, Guangxi Normal University, Guilin 541004, China)

  • Xiaofan Chen

    (School of Economics and Management, Guangxi Normal University, Guilin 541004, China)

  • Jiuying Liang

    (School of Economics and Management, Guangxi Normal University, Guilin 541004, China)

Abstract

We study the strategic pricing decision models of manufacture-led dual-channel supply chains with the free-rider problem under the service level and cost. We use the Stackelberg model to study the impact of the degree with the free-rider problem of consumers on the optimal pricing strategy and the optimal service level of the dual-channel supply chain under various decision-making modes and carry out a numerical simulation. The main conclusions are as follows: In the retailer’s dual-channel supply chain, the deepening of consumer free-riding behavior will reduce the enthusiasm of retailers, but the weak position of the channel will lead to improved service levels and reduced prices, as well as to increase the wholesale price to cover costs. In the manufacturer’s dual-channel supply chain, the deepening of consumer free-riding behavior will lead to a decline in the retailers’ service level and enthusiasm, as well as to a decrease in the wholesale prices and retailers’ pricing. In the two types of dual-channel supply chains, the demand of manufacturers’ network channels increases, the price increases first and then decreases, and the profits of all supply chain members decrease with the increase in the free-rider coefficient of consumers. Finally, we use numerical simulation to verify the validity of the above conclusions, which provides a scientific basis to make optimal pricing decisions in the manufacturer-led dual-channel supply chain.

Suggested Citation

  • Xuelong Zhang & Yuxin Xu & Xiaofan Chen & Jiuying Liang, 2023. "Pricing Decision Models of Manufacturer-Led Dual-Channel Supply Chain with Free-Rider Problem," Sustainability, MDPI, vol. 15(5), pages 1-20, February.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:5:p:4087-:d:1078467
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/5/4087/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/5/4087/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tong-Yuan Wang & Zeng-Qiang Wang & Peng He, 2021. "Impact of Information Sharing Modes on the Dual-Channel Closed Loop Supply Chains Under Different Power Structures," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 38(02), pages 1-38, April.
    2. Gérard P. Cachon & A. Gürhan Kök, 2010. "Competing Manufacturers in a Retail Supply Chain: On Contractual Form and Coordination," Management Science, INFORMS, vol. 56(3), pages 571-589, March.
    3. Li, Guo & Li, Lin & Sun, Jiasen, 2019. "Pricing and service effort strategy in a dual-channel supply chain with showrooming effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 32-48.
    4. Ganesh Iyer, 1998. "Coordinating Channels Under Price and Nonprice Competition," Marketing Science, INFORMS, vol. 17(4), pages 338-355.
    5. Jin Xu & Xiaohan Zhou & Jianghua Zhang & Daniel Zhuoyu Long, 2021. "The optimal channel structure with retail costs in a dual-channel supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 59(1), pages 47-75, January.
    6. Zhenkai Lou & Xuming Lou & Xiaozhen Dai, 2020. "Game-Theoretic Models of Green Products in a Two-Echelon Dual-Channel Supply Chain under Government Subsidies," Mathematical Problems in Engineering, Hindawi, vol. 2020, pages 1-11, May.
    7. Dazhong Wu & Gautam Ray & Xianjun Geng & Andrew Whinston, 2004. "Implications of Reduced Search Cost and Free Riding in E-Commerce," Marketing Science, INFORMS, vol. 23(2), pages 255-262, November.
    8. Shao, Xiaofeng, 2021. "Omnichannel retail move in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 294(3), pages 936-950.
    9. Yan, Nina & Zhang, Yaping & Xu, Xun & Gao, Yongling, 2021. "Online finance with dual channels and bidirectional free-riding effect," International Journal of Production Economics, Elsevier, vol. 231(C).
    10. Jixiang Zhang & Chen Zhu, 2020. "Research on the Dynamic Pricing and Service Decisions in the Reverse Supply Chain considering Consumers’ Service Sensitivity," Sustainability, MDPI, vol. 12(22), pages 1-21, November.
    11. Kaiying Cao & Ping He & Zhixin Liu, 2020. "Production and pricing decisions in a dual-channel supply chain under remanufacturing subsidy policy and carbon tax policy," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 71(8), pages 1199-1215, August.
    12. Esmaeili, M. & Aryanezhad, Mir-Bahador & Zeephongsekul, P., 2009. "A game theory approach in seller-buyer supply chain," European Journal of Operational Research, Elsevier, vol. 195(2), pages 442-448, June.
    13. Wensheng Yang & Yinyuan Si & Jinxing Zhang & Sen Liu & Andrea Appolloni, 2021. "Coordination Mechanism of Dual-Channel Supply Chains Considering Retailer Innovation Inputs," Sustainability, MDPI, vol. 13(2), pages 1-22, January.
    14. Yuyan Wang & Runjie Fan & Liang Shen & Mingzhou Jin, 2020. "Decisions and coordination of green e-commerce supply chain considering green manufacturer's fairness concerns," International Journal of Production Research, Taylor & Francis Journals, vol. 58(24), pages 7471-7489, December.
    15. Jiwoong Shin, 2007. "How Does Free Riding on Customer Service Affect Competition?," Marketing Science, INFORMS, vol. 26(4), pages 488-503, 07-08.
    16. Qiuxiang Li & Mengmeng Li & Yimin Huang, 2020. "Dynamic Investigation in Green Supply Chain considering Channel Service," Complexity, Hindawi, vol. 2020, pages 1-18, July.
    17. Wang, Limin & Song, Qiankun, 2020. "Pricing policies for dual-channel supply chain with green investment and sales effort under uncertain demand," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 171(C), pages 79-93.
    18. Barman, Abhijit & De, Pijus Kanti & Chakraborty, Ashis Kumar & Lim, Chee Peng & Das, Rubi, 2023. "Optimal pricing policy in a three-layer dual-channel supply chain under government subsidy in green manufacturing," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 204(C), pages 401-429.
    19. Yucai Wu & Jiguang Wang & Lu Chen, 2021. "Optimization and Decision of Supply Chain Considering Negative Spillover Effect and Service Competition," Sustainability, MDPI, vol. 13(4), pages 1-20, February.
    20. Zhou, Yong-Wu & Guo, Jinsen & Zhou, Wenhui, 2018. "Pricing/service strategies for a dual-channel supply chain with free riding and service-cost sharing," International Journal of Production Economics, Elsevier, vol. 196(C), pages 198-210.
    21. Yao Kang & Juhong Chen & Di Wu, 2020. "Research on Pricing and Service Level Strategies of Dual Channel Reverse Supply Chain Considering Consumer Preference in Multi-Regional Situations," IJERPH, MDPI, vol. 17(23), pages 1-21, December.
    22. Rubi Das & Abhijit Barman & Pijus Kanti De, 2022. "Integration of pricing and inventory decisions of deteriorating item in a decentralized supply chain: a Stackelberg-game approach," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(1), pages 479-493, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pi, Zhenyang & Fang, Weiguo & Perera, Sandun C. & Zhang, Baofeng, 2022. "Enhancing the online buyer perception of consumer experience products in a dual-channel supply chain: A new role of free-riding," International Journal of Production Economics, Elsevier, vol. 253(C).
    2. Qingren He & Taiwei Shi & Ping Wang, 2022. "Mathematical Modeling of Pricing and Service in the Dual Channel Supply Chain Considering Underservice," Mathematics, MDPI, vol. 10(6), pages 1-15, March.
    3. Subrata Mitra, 2022. "Economic models of price competition between traditional and online retailing under showrooming," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 49(1), pages 29-63, March.
    4. Xuelong Zhang & Doudou Wu & Xiangzhong Zhao, 2022. "Two-Step Pricing Decision Models for Manufacturer-Led Dual-Channel Supply Chains," Sustainability, MDPI, vol. 14(16), pages 1-13, August.
    5. Xue, Musen & Zhang, Jianxiong & Zhu, Guowei, 2020. "Quantity decision timing with spillover effect and asymmetric demand information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 142(C).
    6. Syed Asif Raza, 2020. "Price Differentiation and Inventory Decisions in a Socially Responsible Dual-Channel Supply Chain with Partial Information Stochastic Demand and Cannibalization," Sustainability, MDPI, vol. 12(22), pages 1-42, November.
    7. Dmitri Kuksov & Yuanfang Lin, 2010. "Information Provision in a Vertically Differentiated Competitive Marketplace," Marketing Science, INFORMS, vol. 29(1), pages 122-138, 01-02.
    8. Xu, Senyu & Tang, Huajun & Lin, Zhijun & Lu, Jing, 2022. "Pricing and sales-effort analysis of dual-channel supply chain with channel preference, cross-channel return and free riding behavior based on revenue-sharing contract," International Journal of Production Economics, Elsevier, vol. 249(C).
    9. Wang, Junbin & Wang, Shanshan, 2022. "Revisiting the showrooming effect on online and offline retailers: The strategic role of in-store service," Journal of Retailing and Consumer Services, Elsevier, vol. 66(C).
    10. Taiguang Gao & Kui Wang & Yali Mei & Shan He & Yanfang Wang, 2022. "Supply Chain Pricing Models Considering Risk Attitudes under Free-Riding Behavior," Mathematics, MDPI, vol. 10(10), pages 1-22, May.
    11. Sun, Shuzhen & Liu, Tieming, 2023. "Pricing and sales-effort coordination facing free riding behaviors between a brick-and-mortar retailer and a platform store owned by the manufacturer," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    12. Wen-Bin Wang & Qiang Sun & Xiu-Xia Yan & Yuan-Qing Liu, 2022. "Dual-Channel Supply Chain Financing Operation Strategy Considering Free-Riding Effect under Different Power Structures," Sustainability, MDPI, vol. 14(15), pages 1-27, July.
    13. Tian, Chen & Xiao, Tiaojun & Shang, Jennifer, 2022. "Channel differentiation strategy in a dual-channel supply chain considering free riding behavior," European Journal of Operational Research, Elsevier, vol. 301(2), pages 473-485.
    14. Zongyu Mu & Yuangang Zheng & Hao Sun, 2021. "Cooperative Green Technology Innovation of an E-Commerce Sales Channel in a Two-Stage Supply Chain," Sustainability, MDPI, vol. 13(13), pages 1-28, July.
    15. Li, Jin & Hu, Zening & Shi, Victor & Wang, Qian, 2021. "Manufacturer's encroachment strategy with substitutable green products," International Journal of Production Economics, Elsevier, vol. 235(C).
    16. Wensheng Yang & Yinyuan Si & Jinxing Zhang & Sen Liu & Andrea Appolloni, 2021. "Coordination Mechanism of Dual-Channel Supply Chains Considering Retailer Innovation Inputs," Sustainability, MDPI, vol. 13(2), pages 1-22, January.
    17. Duan, Housheng & Deng, Sijing & Song, Haiqing & Xu, Jiayan, 2021. "The impacts of sales efforts and mode of payment on the competition between agent and retailer," Omega, Elsevier, vol. 103(C).
    18. Wang, Qiang & Wu, Jie & Zhao, Nenggui, 2022. "Optimal operational policies of a dual-channel supply chain considering return service," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 199(C), pages 414-437.
    19. Li, Bai-Xun & Zhou, Yong-Wu & Li, Ji-zi & Zhou, Shi-ping, 2013. "Contract choice game of supply chain competition at both manufacturer and retailer levels," International Journal of Production Economics, Elsevier, vol. 143(1), pages 188-197.
    20. Zhong, Yuyun & Shen, Wenjing & Ceryan, Oben, 2023. "Information provision under showrooming and webrooming," Omega, Elsevier, vol. 114(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:5:p:4087-:d:1078467. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.