Competitive parallel distribution channels with move sequence

Abstract

In this paper, we consider two competitive parallel distribution channels (PDCs) each of them consisting of a manufacturer and a retailer. In every PDC, the manufacturer sells differentiated products to the retailer and the retailer chooses the retail price (margin). We explore the effects of the move sequence on the system performance not only in each distribution channel, but also in the inter-parallel distribution channels subject to the deterministic demand. Under some assumptions, we show that the PDC has the second-mover advantage in this scenario. The system performance will be improved in our model when the parameters satisfy certain conditions. Furthermore, we discuss the results and find some implications.

Keywords

parallel distribution channel / Stackelberg game / move sequence / second-mover advantage

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