TY - JOUR
T1 - Bricks Vs Clicks: The Impact of Manufacturer Encroachment with a Dealer Leasing and Selling of Durable Goods
AU - Xiong, Yu
AU - Yan, Wei
AU - Fernandes, Kiran Jude
AU - Xiong, Zhong-Kai
AU - Guo, Nian
PY - 2011/12/1
Y1 - 2011/12/1
N2 - In durable goods markets, many brand name manufacturers, including IBM, HP, Epson, and Lenovo, have adopted dual-channel supply chains to market their products. There is scant literature, however, addressing the product durability and its impact on players’ optimal strategies in a dual-channel supply chain. To fill this void, we consider a two-period dual-channel model in which a manufacturer sells a durable product directly through both a manufacturer-owned e-channel and an independent dealer who adopts a mix of selling and leasing to consumers. Our results show that the manufacturer begins encroaching into the market in Period 1, but the dealer starts withdrawing from the retail channel in Period 2. Moreover, as the direct selling cost decreases, the equilibrium quantities and wholesale prices become quite angular and often nonmonotonic. Among other results, we find that both the dealer and the supply chain may benefit from the manufacturer’s encroachment. Our results also indicate that both the market structure and the nature of competition have an important impact on the player’s (dealer’s) optimal choice of leasing and selling.
AB - In durable goods markets, many brand name manufacturers, including IBM, HP, Epson, and Lenovo, have adopted dual-channel supply chains to market their products. There is scant literature, however, addressing the product durability and its impact on players’ optimal strategies in a dual-channel supply chain. To fill this void, we consider a two-period dual-channel model in which a manufacturer sells a durable product directly through both a manufacturer-owned e-channel and an independent dealer who adopts a mix of selling and leasing to consumers. Our results show that the manufacturer begins encroaching into the market in Period 1, but the dealer starts withdrawing from the retail channel in Period 2. Moreover, as the direct selling cost decreases, the equilibrium quantities and wholesale prices become quite angular and often nonmonotonic. Among other results, we find that both the dealer and the supply chain may benefit from the manufacturer’s encroachment. Our results also indicate that both the market structure and the nature of competition have an important impact on the player’s (dealer’s) optimal choice of leasing and selling.
UR - http://www.scopus.com/inward/record.url?scp=80054908965&partnerID=8YFLogxK
U2 - 10.1016/j.ejor.2011.08.012
DO - 10.1016/j.ejor.2011.08.012
M3 - Article
SN - 0377-2217
VL - 217
SP - 75
EP - 83
JO - European Journal of Operational Research
JF - European Journal of Operational Research
IS - 1
ER -