Joint Selling of Complementary Components Under Brand and Retail Competition

He, Yao; Yin, Shuya

doi:10.1287/msom.2015.0533

Cited by 22 publications

(7 citation statements)

References 40 publications

(38 reference statements)

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“…Packalen (2010) demonstrates that cooperation between two complementary monopolists may decrease consumer surplus due to the low entry inducement incentive. Yin (2010) and He and Yin (2015) examine the effect of demand uncertainty and brand competition on the stable coalition structures among complementary manufacturers respectively. Cai, Dai, and Zhou (2012) show that with revenue sharing, exclusive deal between manufacturers and retailers can be an equilibrium strategy considering the complementarity between manufacturers' products and retailers' service.…”

Section: Related Literaturementioning

confidence: 99%

Channel configuration in a complementary market under different power structures

Mao

Guan

et al. 2020

Naval Research Logistics

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This paper investigates the impact of channel selection power on the firms' channel configuration strategies in a market with two upstream manufacturers providing complementary products and one downstream retailer who can resell the products. Each manufacturer can sell its product either directly by incurring a selling cost or indirectly via the retailer, in which the decision is further dependent on the relative channel selection powers between itself and the retailer. We investigate three scenarios depending on the possible power structures among the firms and show that the equilibrium channel configuration strategy hinges highly on the channel selection power, the direct selling cost and the degree of complementarity between the two products. The manufacturer may prefer direct selling when it is more powerful than the retailer and both the direct selling cost and the degree of complementarity are relatively low. However, when the degree of products' complementarity is sufficiently high, a manufacturer would not choose direct selling even though there is no direct selling cost. We also show that a stronger channel selection power does not necessarily benefit but may occasionally hurt a manufacturer's profitability. For the manufacturer who does not have channel selection power before, the enhanced channel selection power endows it with more selling options but also encourages the leading manufacturer (who already has the channel power) to design a more aggressive channel configuration strategy that only benefits itself but hurts the others.

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Section: Related Literaturementioning

confidence: 99%

Channel configuration in a complementary market under different power structures

Mao

Guan

et al. 2020

Naval Research Logistics

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“…Several papers have examined cases of suppliers or a group of sellers supplying complementary components to a downstream firm (e.g. Nagarajan and Bassok, 2008;Nagarajan and Soši´c, 2008;Granot and Yin, 2008;He and Yin, 2015). Herein, we incorporate ambiguity and social network dynamics in the negotiation framework of Nagarajan and Bassok (2008) The negotiation sequence is determined by the buyer.…”

Section: Sequential Negotiation Between One Buyer and Several Suppliersmentioning

confidence: 99%

Ambiguity aversion in buyer-seller relationships: A contingent-claims and social network explanation

Gao

Driouchi

Bennett

2018

International Journal of Production Economics

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Negotiations between buyers and sellers (or suppliers) of goods and services have become increasingly important due to the growing trend towards international purchasing, outsourcing and global supply networks together with the high uncertainty associated with them. This paper examines the effect of ambiguity aversion on price negotiations using multiple-priors-based real options with non-extreme outcomes. We study price negotiation between a buyer and seller in a dual contingentclaims setting (call option holding buyer vs. put option holding seller) to derive optimal agreement conditions under ambiguity with and without social network effects. We find that while higher ambiguity aversion raises the threshold for commitment for the seller, it has equivocal effects on the buyer's negotiation prospects in the absence of network control. Conversely when network position and relative bargaining power are accounted for, we find the buyer's implicit price (or negotiation threshold) decreases (or increases) unequivocally with increasing aversion to ambiguity. Extending extant real options research on price negotiation to the case of ambiguity, this set of results provides new insights into the role of ambiguity aversion and network structures in buyer-seller relationships, including how they influence the range of negotiation agreement between buyers and sellers. The results also help assist managers in formulating robust buying/selling strategies for bargaining under uncertainty. By knowing their network positions and gathering background information or inferring the other party's ambiguity tolerance beforehand, buyers and sellers can anticipate where the negotiation is heading in terms of price negotiation range and mutual agreement possibilities.

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“…Granot and Yin (2008) and Yin (2010), on the other hand, study how contracting schemes and market conditions (e.g., demand uncertainty) drive such price coordination decisions. Lastly, He and Yin (2015) discuss the effects of upstream and downstream competition on group selling decisions among suppliers. We refer the readers to Huang et al (2016) and He and Yin (2015) for detailed reviews.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Lastly, He and Yin (2015) discuss the effects of upstream and downstream competition on group selling decisions among suppliers. We refer the readers to Huang et al (2016) and He and Yin (2015) for detailed reviews. Although, like us, the latter stream models price coordination in assembly systems, the issue of how end product's durability and customer behavior affect such decisions has not been addressed in this literature.…”

Section: Literature Reviewmentioning

confidence: 99%

Group Selling, Product Durability, and Consumer Behavior

Ray

Yin

2016

Production and Operations Management

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Firms producing complementary goods often strategically form groups and jointly sell their products to better coordinate their decisions. For consumer durables, decisions about such collaboration might be complicated due to two factors. Because of their durability and presence of used goods markets, such products engender “future” price competition between new and used goods. On the other hand, consumers of such products might be forward‐looking and patient, both of which affect their purchasing behavior. In this study, we study how the above product and consumer characteristics interact to affect the group selling decisions of complementary firms. We do so through a two‐period model consisting of a value chain with two upstream manufacturers and a downstream retailer. When consumers are relatively impatient and reluctant to wait to buy later, group selling by manufacturers will take place only when the end product is relatively perishable, that is, product durability is low. However, if consumers are patient, that is, willing to wait, collaboration happens only when the end product is quite durable; for relatively perishable products the manufacturers sell their products separately. We also comment on how our results are affected by factors like manufacturers directly selling to end consumers or there being multiple opportunities to decide whether or not to use group selling strategy.

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Joint Selling of Complementary Components Under Brand and Retail Competition

Cited by 22 publications

References 40 publications

Channel configuration in a complementary market under different power structures

Channel configuration in a complementary market under different power structures

Ambiguity aversion in buyer-seller relationships: A contingent-claims and social network explanation

Group Selling, Product Durability, and Consumer Behavior

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