Pricing Model Of The Market Power Structure And The Behavior Of Free Riding O2O Supply Chain

As the Internet technology and the logistics service industry develops rapidly, the online consumption service system had improved and consumer consciousness also changed. More and more people choose shopping online, which prompted the electricity retail enterprises rise. A large number of records on scale and volume were refreshed. At the same time, traditional retail enterprises encountered a lot of developing challenges because of various reasons. Faced with a large number of channel choices, consumers began to pay more attention to shopping service experience, which provides a new opportunity to the traditional retail enterprises. The competition on supply chain channel become more and more incentive between electricity retail enterprises and the traditional retail enterprises. Therefore, researching the impact of different market structure and free riding in a dual channel supply chain decisions and profit will have a realistic significance.In this paper, we set an O2O supply chain that contains a manufacturer, two retailers as the research object. Based on the research perspective of the free riding of customer service, paper analyzed the supply chain decision-making under manufacturer’s leading, retailer’s leading, or Nash equilibrium situation, and got management inspiration conclusion.The research showed that there is unique optimal pricing under three different market structures. Sensitivity analysis indicated that both the optimal pricing and maximum profit are the increasing function of free riding factor. Besides, no matter in what kind of market structure: when there is the free riding behavior, the online retailer’s wholesale price of manufacturer is lower than the offline retailer’s wholesale price of manufacturer. At the same time, the online retailer’s retail price is also lower than the offline retail price; when there is the free riding behavior, in different range online retailer’s and off retailer’s profit is different.In addition, there are several important discoveries by comparing the pricing and profit of the manufacturer and the two retailers under three different market structures. In terms of the manufacturer’s pricing decision, manufacturer leading is optimal, Nash equilibrium is the second, and retailer dominating is minimum. For two retailers, the optimal pricing decision is retailer leading or manufacturer leading, which larger than that of Nash equilibrium. As for profit, the maximum profits of the manufacturer appear in the manufacturer’s leading supply chain, Nash equilibrium times, and retailer dominating is worst. For retailers, the retailer leading is optimal, the Nash equilibrium is the second, and the manufacturer is minimum. However, the maximum overall profit of supply chain occurs in Nash equilibrium. And when retailer or manufacturer leads the supply chain, the overall profit is equal.