Pricing Decisions of a Supply Chain with Multichannel Retailer under Fairness Concerns

Xueping Zhen, Dan Shi, Sang-Bing Tsai and Wei Wang

Mathematical Problems in Engineering, 2019, vol. 2019, 1-22

Abstract:

With the rapid development of the Internet, many traditional retailers have built their online channels. The fairness concern may play an important role in a dual-channel supply chain with a multichannel retailer. This paper establishes a Stackelberg game model in which a manufacturer produces and sells products through direct online channel and a retailer sells directly to consumers through online and offline channels. The manufacturer’s fairness concern (advantageous inequity) and the retailer’s fairness concern (disadvantageous inequity) are considered. Four scenarios are investigated: no fairness concern (NF), the retailer fairness concern (RF), the manufacturer fairness concern (MF), and both the manufacturer and the retailer fairness concern (MRF). The theoretical analysis shows that if the manufacturer’s advantageous inequity concern is low, the profit of the whole supply chain in the MRF scenario is the greatest. Otherwise, the supply chain profit in the NF or RF scenario is the greatest. That is, the manufacturer’s and the retailer’s fairness concern may increase the profit of the supply chain. This study also finds that the manufacturer’s advantageous inequity concern can increase the social welfare. The retailer should not concern about fairness if the manufacturer has high fairness concern. Besides, this paper shows that the manufacturer’s selling price cannot be affected by the fairness concern. Adjusting the wholesale price is the only thing that the manufacturer can do to reduce disadvantageous or advantageous inequity. In the RF scenario, the role of the retailer’s disadvantageous inequity concern is to reallocate the supply chain profit. Our findings provide some managerial insights on the pricing decision when the multichannel retailer and the manufacturer consider the fairness.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://downloads.hindawi.com/journals/MPE/2019/9547302.pdf (application/pdf)
http://downloads.hindawi.com/journals/MPE/2019/9547302.xml (text/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hin:jnlmpe:9547302

DOI: 10.1155/2019/9547302

Access Statistics for this article

More articles in Mathematical Problems in Engineering from Hindawi
Bibliographic data for series maintained by Mohamed Abdelhakeem ().