Strategic Decentralization and Channel Coordination

被引:111
作者
Desai, Preyas [1 ]
Koenigsberg, Oded [2 ]
Purohit, Devavrat [1 ]
机构
[1] Duke Univ, Fuqua Sch Business, Durham, NC 27708 USA
[2] Columbia Univ, Grad Sch Business, New York, NY 10027 USA
来源
QME-QUANTITATIVE MARKETING AND ECONOMICS | 2004年 / 2卷 / 01期
关键词
durable goods; channels of distribution; incentives;
D O I
10.1023/B:QMEC.0000017033.09155.12
中图分类号
F [经济];
学科分类号
02 ;
摘要
In this paper, we show that under certain conditions, strategic decentralization through the addition of a retailer in the distribution channel can increase a manufacturer's profits. The specific case on which we focus is the quantity coordination (double marginalization) problem for a manufacturer selling durable goods in a two-period setting. We show that the standard solution that coordinates a channel for non-durables does not coordinate the channel for durables. In particular, even though a manufacturer can achieve channel coordination by offering per-period, two-part fees, the equilibrium wholesale price in the first period is strictly above the manufacturer's marginal cost. This is in stark contrast to the two-part solution for non-durables where the equilibrium wholesale price is equal to marginal cost. We also identify a strategy that solves both the channel coordination and the Coase problem associated with durable goods. In this strategy, at the beginning of period 1, the manufacturer writes a contract with the retailer specifying a fixed fee and wholesale prices covering both periods. We show that by adding a retailer and using this contract, the manufacturer makes higher profits than it could if it were to sell directly to consumers.
引用
收藏
页码:5 / 22
页数:18
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