To investigate pricing strategy and coordination mechanisms of the dual-channel supply chain with a retailer that has countervailing power to the manufacturer, we consider the effect of product variety in developing decentralized and centralized dual-channel supply chain game models. By solving these modes and comparing the results, we find the following: (i) The retailer's offline retail price is greater than the online retail price of the manufacturer when the retailer's market share is greater than the online market shares of the manufacturer under the centralized model. (ii) Online and offline product demand in a centralized supply chain increases with product variety. (iii) The relationship between offline retail price, wholesale price, and product variety depend on the threshold of the offline channel's market size. The wholesale price decreases with the countervailing power of the retailer. (iv) The relationship between offline retail price and demand in centralized and decentralized supply chains is related to the product variety threshold. Furthermore, manufacturer and total supply chain profit first rises and then declines, whereas the retailer's profit steadily increases with the degree of product variety. Two-part tariff pricing contracts can coordinate a decentralized model to obtain the same profit as that in a centralized model.
This correction is published as typesetter overlooked several proofing corrections.Original article has been updated.Publisher's Note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.