Manufacturer’s revenue-sharing contract and retail competition

Yao, Zhong; Leung, Stephen C. H.; Lai, Kin Keung

doi:10.1016/j.ejor.2007.01.049

Cited by 247 publications

(121 citation statements)

References 22 publications

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“…When φ = 0, the players adopt a WPC. In accordance with the literature of marketing and operations using an RSC (e.g., El Ouardighi et al 2008;Cachon and Lariviere 2005;Cachon 2003;Pan et al 2010;Geng and Mallik 2007;Wang 2006;Yao et al 2008;Dana and Spier 2001;De Giovanni 2011b;El Ouardighi and Kim 2010) and the research adopting a sharing profit mechanism (e.g., Chintagunta and Jain 1992;Zaccour 2003a, 2003b;Jør-gensen et al 2003Jør-gensen et al , 2006 we keep the assumption that the sharing parameter is exogenous; considering it as a strategy leads to an over specification of the model, where all possible elements are computed and thus the differences among scenarios vanishes. Moreover, the manufacturer decides the participation rate, which represents the percentage of retailer's advertising efforts that he wants to pay.…”

Section: The Modelmentioning

confidence: 60%

“…Since the retailer influences the demand by controlling the price, she already decides an optimal price which is independent of the sharing parameter value. We follow the assumption of previous research in marketing and operations (e.g., El Ouardighi et al 2008;Cachon and Lariviere 2005;Cachon 2003;Pan et al 2010;Geng and Mallik 2007;Wang 2006;Yao et al 2008;Dana and Spier 2001;De Giovanni 2011b;El Ouardighi and Kim 2010) as well as the contributions using a sharing profits mechanism (e.g., Chintagunta and Jain 1992;Zaccour 2003a, 2003b;Jørgensen et al 2003Jørgensen et al , 2006 thus considering the sharing parameter as exogenous while identifying under which values it allows a two-parameter contract to be payoff-Pareto-improving.…”

Section: Equilibria In a Coordinated Scenariomentioning

confidence: 99%

“…Recent research in supply chain management has shown that an RSC works perfectly to coordinate a one-supplier, one-retailer chain in applications on the video-rental industry (Cachon and Lariviere 2005). Although research in game theory showed the benefits of an RSC in various applications (e.g., Pan et al 2010;Cachon and Lariviere 2005;El Ouardighi et al 2008;Geng and Mallik 2007;Dana and Spier 2001;Wang 2006;Yao et al 2008;El Ouardighi and Kim 2010), some limitations exist. For instance, an RSC does not apply in industries in which transaction costs are really high (De Giovanni 2011b), when chain competition occurs (Cachon and Lariviere 2005), or when the implementation of information and auditing systems is too complex.…”

Section: Introductionmentioning

confidence: 99%

“…We make the assumption that the wholesale price is a decision variable rather than a parameter. Research in static (e.g., Yao et al 2008) and dynamic literature (e.g., El Ouardighi and Kim 2010) has considered the wholesale price exogenously. The core issue when adopting an RSC relates to how the player beneficiary of the share lowers the wholesale price.…”

Section: Introductionmentioning

confidence: 99%

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Overcoming the drawbacks of a revenue-sharing contract through a support program

Giovanni

Roselli

2012

Ann Oper Res

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In a marketing channel governed by goodwill dynamics, players adjust their pricing and advertising strategies when shifting from a wholesale price contract (WPC) to a revenue sharing contract (RSC). We demonstrate that this shift is not payoff-Pareto-improving when the retailer, who is the player transferring the share of revenues, is myopic. Further, we identify the conditions under which the negative effects an RSC creates may be alleviated when the manufacturer offers a support program. Finally, contrarily to operational coordination instruments such as an RSC, a support program always leads to a payoff-Paretoimproving situation and thus should be preferred by firms to reach coordination.

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Section: The Modelmentioning

confidence: 60%

Section: Equilibria In a Coordinated Scenariomentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Overcoming the drawbacks of a revenue-sharing contract through a support program

Giovanni

Roselli

2012

Ann Oper Res

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“…Under the non-consigned contract, the manufacturer offers the retailer a two-part contract ( , ) w r where 0 < r < 1, by charging a lower wholesale price w in exchange for a (1 -r) percentage of the retailer's revenue. The retailer then determines a self-interest replenishment quantity (or a stocking factor) and/or retail price (Cachon and Lariviere, 2005;Gerchak et al, 2006;Van der Veen and Venugopal, 2005;Chauhan and Proth, 2005;Koulamas, 2006;Yao et al, 2008aYao et al, , 2008b. Such setting with somewhat variation is widely applied in the video rentals (Dana and Spier, 2001;Mortimer, 2008;Cachon and Lariviere, 2005;Gerchak et al, 2006;Van der Veen and Venugopal, 2005) and the internet content services (Foros et al, 2009).…”

Section: Introductionmentioning

confidence: 99%

On eBay's Fee Structure from a Channel Coordination Perspective

Chen

Cheng²,

Chien

2010

Industrial Engineering and Management Systems

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Abstract. Can eBay.com's fee structure coordinate the channel? It's a critical strategic problem in e-commerce operations and an interesting research hypothesis as well. eBay's fees include three parts: monthly subscription fee, insertion fee, and final value fee (i.e., a revenue sharing portion), which represent a generic form of revenue sharing fee structure between the retailer and the vendor in a supply chain. This research deals with such a channel consisting of a price-setting vendor who sells products through eBay's marketplace exclusively to the end customers. The up-and down-stream channel relationship is consignment-based revenue sharing. We use a game-theoretic approach with assumption of the retailer (i.e., eBay.com) being a Stackelberg-leader and the vendor being a follower. The Stackelberg-leader decides on the terms of revenue sharing contract (i.e., fee structure), and the follower (vendor) decides on how many units to sell and the items' selling price. This study formulates several profit-maximization models by considering the effects of the retail price on the demand function. Under such settings, we show that eBay's fee structure can improve the channel efficiency; yet it cannot coordinate the channel optimally.

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Advertising or recommender systems? A game‐theoretic analysis of online retailer platforms' decision‐making

2022

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Advertising and recommender systems are two germane demand creation tools to expand the market. We examine the model comprising two manufacturers and one online retailer to study the efficacy of advertising investment based on recommender systems with and without considering cost sharing. Based on game‐theoretic models and numerical analysis in three scenarios, some managerial insights are suggested for online retailers to be the best beneficiary and avoid “free riders.” For the whole supply chain, advertising has a better effect than recommender systems when their coefficients are small. Otherwise, leveraging recommender systems is a predominant strategy for the whole supply chain.

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Manufacturer’s revenue-sharing contract and retail competition

Cited by 247 publications

References 22 publications

Overcoming the drawbacks of a revenue-sharing contract through a support program

Overcoming the drawbacks of a revenue-sharing contract through a support program

On eBay's Fee Structure from a Channel Coordination Perspective

Advertising or recommender systems? A game‐theoretic analysis of online retailer platforms' decision‐making

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