IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v333y2024i1d10.1007_s10479-023-05678-8.html
   My bibliography  Save this article

Contract design considering data driven marketing: with and without the cap and trade regulation

Author

Listed:
  • Jingxin Zhang

    (Tianjin University
    Zhengzhou University)

  • Jianxiong Zhang

    (Tianjin University)

  • Chunqiu Xu

    (NanKai University
    Zhengzhou University)

Abstract

Due to the natural advantage of data acquisition, data driven marketing (DDM) has been widely adopted online. The major concern of managers, especially when facing severe environmental issues, is to adjust proper measures regarding DDM promotions (including consumers’ DDM preference and offline free riding), so as to ensure efficient implementation of the cap and trade regulation (CTR). We developed two models: No-CTR and CTR under centralized and decentralized scenarios, and then proposed corresponding contracts to achieve Pareto improvement. The validity of both coordination schemes has been demonstrated. Contrary to conventional wisdom, the results indicate that encouraging DDM promotions and consumers’ environmental awareness are not always beneficial to the manufacturer or retailers. Certain conditions should be met based on promotions and wholesale price. Secondly, comparing No-CTR with CTR, promotions should be set for different carbon quotas to ensure all members prefer CTR. Especially, when carbon quota is moderate, below a certain level can also be optimal. Furthermore, numerical analysis suggests that with the increase of carbon trading price, the online quantity will evolve from downward to upward, as will both retailers’ profit. Entrepreneurs should be mindful of balancing the trade-offs contingent on DDM promotion effect because it plays an essential role in CTR implementation efficiency. In our model, stochastic demand is also considered.

Suggested Citation

  • Jingxin Zhang & Jianxiong Zhang & Chunqiu Xu, 2024. "Contract design considering data driven marketing: with and without the cap and trade regulation," Annals of Operations Research, Springer, vol. 333(1), pages 157-199, February.
    • Handle: RePEc:spr:annopr:v:333:y:2024:i:1:d:10.1007_s10479-023-05678-8
    DOI: 10.1007/s10479-023-05678-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-023-05678-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-023-05678-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hua, Guowei & Cheng, T.C.E. & Wang, Shouyang, 2011. "Managing carbon footprints in inventory management," International Journal of Production Economics, Elsevier, vol. 132(2), pages 178-185, August.
    2. Jinjin Liu & Hua Ke, 2021. "Firms' preferences for retailing formats considering one manufacturer's emission reduction investment," International Journal of Production Research, Taylor & Francis Journals, vol. 59(10), pages 3062-3083, May.
    3. Pereira, Marina Meireles & Frazzon, Enzo Morosini, 2021. "A data-driven approach to adaptive synchronization of demand and supply in omni-channel retail supply chains," International Journal of Information Management, Elsevier, vol. 57(C).
    4. 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).
    5. Ji, Jingna & Zhang, Zhiyong & Yang, Lei, 2017. "Comparisons of initial carbon allowance allocation rules in an O2O retail supply chain with the cap-and-trade regulation," International Journal of Production Economics, Elsevier, vol. 187(C), pages 68-84.
    6. Joseph J. Spengler, 1950. "Vertical Integration and Antitrust Policy," Journal of Political Economy, University of Chicago Press, vol. 58(4), pages 347-347.
    7. 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.
    8. Guoge Yang & Fengyi Wang & Feng Deng & Xianhong Xiang, 2023. "Impact of Digital Transformation on Enterprise Carbon Intensity: The Moderating Role of Digital Information Resources," IJERPH, MDPI, vol. 20(3), pages 1-26, January.
    9. Zhou, Xiaoyang & Wei, Xiaoya & Lin, Jun & Tian, Xin & Lev, Benjamin & Wang, Shouyang, 2021. "Supply chain management under carbon taxes: A review and bibliometric analysis," Omega, Elsevier, vol. 98(C).
    10. Li, Xiang, 2020. "Reducing channel costs by investing in smart supply chain technologies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    11. Ke Li & Gengxin Dai & Yanfei Xia & Zongyu Mu & Guitao Zhang & Yangyan Shi, 2022. "Green Technology Investment with Data-Driven Marketing and Government Subsidy in a Platform Supply Chain," Sustainability, MDPI, vol. 14(7), pages 1-22, March.
    12. Jiwoong Shin, 2007. "How Does Free Riding on Customer Service Affect Competition?," Marketing Science, INFORMS, vol. 26(4), pages 488-503, 07-08.
    13. Xing, Dahai & Liu, Tieming, 2012. "Sales effort free riding and coordination with price match and channel rebate," European Journal of Operational Research, Elsevier, vol. 219(2), pages 264-271.
    14. Chou, Szu-Yu & Shen, George C. & Chiu, Hung-Chang & Chou, Yu-Tsun, 2016. "Multichannel service providers' strategy: Understanding customers' switching and free-riding behavior," Journal of Business Research, Elsevier, vol. 69(6), pages 2226-2232.
    15. Tsan‐Ming Choi & Stein W. Wallace & Yulan Wang, 2018. "Big Data Analytics in Operations Management," Production and Operations Management, Production and Operations Management Society, vol. 27(10), pages 1868-1883, October.
    16. Shen, Bin & Qian, Rongrong & Choi, Tsan-Ming, 2017. "Selling luxury fashion online with social influences considerations: Demand changes and supply chain coordination," International Journal of Production Economics, Elsevier, vol. 185(C), pages 89-99.
    17. Yen-Yao Wang & Chenhui Guo & Anjana Susarla & Vallabh Sambamurthy, 2021. "Online to Offline: The Impact of Social Media on Offline Sales in the Automobile Industry," Information Systems Research, INFORMS, vol. 32(2), pages 582-604, June.
    18. Zhongrui Wang & Qinghua Wu, 2021. "Carbon emission reduction and product collection decisions in the closed-loop supply chain with cap-and-trade regulation," International Journal of Production Research, Taylor & Francis Journals, vol. 59(14), pages 4359-4383, July.
    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. Xu, Xiaoping & Wang, Yuting & Cheng, T.C.E. & Choi, Tsan-Ming, 2024. "Should live broadcasting platforms adopt artificial intelligence? A sales effort perspective," European Journal of Operational Research, Elsevier, vol. 318(3), pages 979-999.
    2. 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).
    3. 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.
    4. Mengwan Li & Miyuan Shan & Qingfeng Meng, 2024. "Pricing and promotion efforts strategies of dual-channel green supply chain considering service cooperation and free-riding between online and offline retailers," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(2), pages 3507-3527, February.
    5. Xu, Xiaoping & Yang, Yuanyuan & Zhang, Juzhi & Cheng, T.C.E., 2023. "Live streaming platform operations and coordination under the cap-and-trade regulation: Platform-enabled mode versus platform-agency mode," International Journal of Production Economics, Elsevier, vol. 260(C).
    6. Huang, Lingchen & Liu, Bin & Zhang, Rong, 2024. "Channel strategies for competing retailers: Whether and when to introduce live stream?," European Journal of Operational Research, Elsevier, vol. 312(2), pages 413-426.
    7. 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).
    8. 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.
    9. Cai, Ya-Jun & Lo, Chris K.Y., 2020. "Omni-channel management in the new retailing era: A systematic review and future research agenda," International Journal of Production Economics, Elsevier, vol. 229(C).
    10. Xu, Xiaoping & He, Ping & Zhou, Li & Cheng, T.C.E., 2023. "Coordination of a platform-based supply chain in the marketplace or reselling mode considering cross-channel effect and blockchain technology," European Journal of Operational Research, Elsevier, vol. 309(1), pages 170-187.
    11. Sun, Cuiying & Zhang, Xiong & Zhou, Yong-Wu & Cao, Bin, 2022. "Pricing, financing and channel structure for capital-constrained dual-channel supply chains with product heterogeneity," International Journal of Production Economics, Elsevier, vol. 253(C).
    12. 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.
    13. Erfan Nobil & Leopoldo Eduardo Cárdenas-Barrón & Imelda de Jesús Loera-Hernández & Neale R. Smith & Gerardo Treviño-Garza & Armando Céspedes-Mota & Amir Hossein Nobil, 2023. "Sustainability Economic Production Quantity with Warm-Up Function for a Defective Production System," Sustainability, MDPI, vol. 15(2), pages 1-19, January.
    14. Xiao Zhou & Xiancong Wu, 2023. "Decisions for a Retailer-Led Low-Carbon Supply Chain Considering Altruistic Preference under Carbon Quota Policy," Mathematics, MDPI, vol. 11(4), pages 1-23, February.
    15. Yuyan Wang & Tingting Yu & Rui Zhou, 2022. "The Impact of Legal Recycling Constraints and Carbon Trading Mechanisms on Decision Making in Closed-Loop Supply Chain," IJERPH, MDPI, vol. 19(12), pages 1-26, June.
    16. Xia, Liangjie & Li, Kang & Wang, Jun & Xia, Yi & Qin, Juanjuan, 2024. "Carbon emission reduction and precision marketing decisions of a platform supply chain," International Journal of Production Economics, Elsevier, vol. 268(C).
    17. 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.
    18. Yong Zha & Jiahong Zhang & Xiaohang Yue & Zhongsheng Hua, 2015. "Service supply chain coordination with platform effort-induced demand," Annals of Operations Research, Springer, vol. 235(1), pages 785-806, December.
    19. Susu Cheng & Fan Zhang, 2022. "Regulatory pressure and consumer environmental awareness in a green supply chain with retailer responsibility: A dynamic analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 1133-1151, June.
    20. Wang, Yingjia & Lin, Jiaxin & Choi, Tsan-Ming, 2020. "Gray market and counterfeiting in supply chains: A review of the operations literature and implications to luxury industries," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(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:spr:annopr:v:333:y:2024:i:1:d:10.1007_s10479-023-05678-8. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.