 Agency or wholesale? Strategic analysis of the influence of distribution strategy on product line design with endogenous qualityHanrui Cao, Zhixin Chen, Zhixiang Zhou and Jie Wu Economic Analysis and Policy, 2023, vol. 79, issue C, 687-701 Abstract: Nowadays, the single-product strategy can no longer meet the diversified needs of consumers, and retail platforms give firms different sales model choices (agency or wholesale). Therefore, revealing the interaction between product line design and distribution strategy has become an important practical problem that needs to be solved urgently. By constructing an endogenous quality Stackelberg game model, we analyzed the optimal production and pricing decisions of firms and platforms under different sales models. By comparing the equilibrium results, we find that both the firm and the platform can benefit from the product line extension. When the platform’s profit-sharing proportion is in a specified middle range, the firm and platform can reach a consensus on the distribution strategy. Moreover, even if there is no cost to extend the product line, the firm does not choose to extend the product line when the platform charges a large proportion of the revenue. Keywords: Quality design; Agency contract; Wholesale contract; Product line; Climate change (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:79:y:2023:i:c:p:687-701 DOI: 10.1016/j.eap.2023.06.040 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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