A Negotiation Model for Inducing Higher Service in a Distribution Channel

Ricardo Ernst (), Jose Ignacio López-Sánchez () and David Urbano ()
Additional contact information
Ricardo Ernst: Georgetown University
Jose Ignacio López-Sánchez: Complutense University of Madrid

Group Decision and Negotiation, 2009, vol. 18, issue 5, No 6, 499-517

Abstract: Abstract This paper analyzes, in the context of negotiation, the problem of coordination and conflict resolution between the manufacturer (Seller) and the retailers (Buyers) for a two-tier inventory system. The retailers capture demand (from customers) and therefore are responsible for the level of service offered by the system. The larger the inventory that a retailer has of a particular product, the lower the probability of running out of stock and therefore, avoid the possibility of a lost sale for the manufacturer. A conflict arises (and therefore the negotiation process starts) when the manufacturer wants the retailer to increase the level of service while retailers are satisfied with the status quo. Using the Nash bargaining solution, we develop a theoretical framework that incorporates behavioral dimensions and predicts the outcome of “sharing” the profit. The results indicate the advantage of developing long term relationships among the members of the distribution channel to minimize the uncertainty and therefore the source of conflict.

Keywords: Negotiation; Marketing; Game theory; Operations; Collaborative seller-buyers (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10726-008-9139-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:grdene:v:18:y:2009:i:5:d:10.1007_s10726-008-9139-5

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10726/PS2

DOI: 10.1007/s10726-008-9139-5

Access Statistics for this article

Group Decision and Negotiation is currently edited by Gregory E. Kersten

More articles in Group Decision and Negotiation from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().