On channel coordination under price-dependent revenue-sharing: can eBay's fee structure coordinate the channel?

NCUIR > School of Management at National Central University > Graduate Institute of Industrial Management > journal & Dissertation > Item 987654321/51666

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Title:	On channel coordination under price-dependent revenue-sharing: can eBay's fee structure coordinate the channel?
Authors:	Chen,JM;Cheng,HL;Lin,IC
Contributors:	工業管理研究所
Keywords:	SUPPLY CHAIN COORDINATION;VIDEO RENTAL INDUSTRY;CONSIGNMENT CONTRACT;PERFORMANCE;COMPETITION
Date:	2011
Issue Date:	2012-03-27 19:02:10 (UTC+8)
Publisher:	國立中央大學
Abstract:	This article deals with the problem of coordinating a vertically separated channel under consignment contracts with a price-dependent revenue-sharing (R-S) function. We consider the retailer being a channel leader who offers the vendor a leave-it-or-take-it contract, and the vendor being a price-setting firm who sells the one-of-a-kind goods through the exclusive channel. Under such a setting, the retailer decides on the term of R-S contract, and the vendor determines the retail price of the product. For each item sold, the retailer deducts an agreed-upon percentage from the price and remits the balance to the vendor. We model the decision-making of the two firms as a Stackelberg game, and carry out equilibrium analysis for both the centralized and decentralized regimes of the channel with consideration of three kinds of contracts: the fixed, the price-increasing, and the price-decreasing R-S percentage. Our analysis reveals that the contract with a price-decreasing R-S function, for example, the fee structure adopted by eBay.com, performs worse than the others. It persists in a consistent bias: the price-decreasing R-S induces the vendor to choose a higher price, and the retailer tends to receive a lower R-S percentage, which leads to less demand quantity, less profit, and channel inefficiency. Journal of the Operational Research Society (2011) 62, 1992-2001. doi:10.1057/jors.2010.174 Published online 15 December 2010
Relation:	JOURNAL OF THE OPERATIONAL RESEARCH SOCIETY
Appears in Collections:	[Graduate Institute of Industrial Management] journal & Dissertation

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