Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/27116
Title: Purchasing choices and channel structure strategies for a two-echelon system with risk-averse players
Authors: Xiao, T
Choi, TM 
Keywords: Channel structure
Game theory
Purchasing choice
Supply chain management
Issue Date: 2009
Publisher: Elsevier
Source: International journal of production economics, 2009, v. 120, no. 1, p. 54-65 How to cite?
Journal: International journal of production economics 
Abstract: We develop a dynamic game theoretic model of a two-echelon system consisting of two manufacturers and two retailers, where all players are risk averse. Each manufacturer has two pure channel strategies, namely the integrated channel (I) and the retailing channel (R). We mainly focus on how the channel structure strategies and wholesale prices of the manufacturers depend on the risk sensitivity, the pricing power and the purchasing option of the retailer. We derive the optimal decisions for each player and find that: a higher substitutability of the two products implies a stronger manufacturer's motivation to use retailing channel to act against the retailing channel. We further identify the effects of the retailer's risk sensitivity on the wholesale prices which depend on the channel structure. If the total net price cap for the leader retailer is sufficiently large relative to the follower retailer, then the purchasing option of the retailer affects the supply chain's channel structure significantly.
URI: http://hdl.handle.net/10397/27116
ISSN: 0925-5273
DOI: 10.1016/j.ijpe.2008.07.028
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