Pricing Strategies Of Electronic Manufacturer's Dual-channel Supply Chain With Free Riding

With the popularity of the Internet and the rapid development of e-commerce,in addition to traditional retail distribution channel,many manufacturers set up Internet channel,hoping to take the lead in the future market competition.However,because of the difference between the dual-channel,it is easy to cause free-riding behaviors and channel conflicts.In the dual-channel of electronics,the behavior of free-riding is more universal and diverse.Motivated by this background,this paper establishes the pricing model of a supply chain with dual-channel,consisting of one electronic manufacturer and one retailer for electronics by using the theory of consumer utility and the related theories in Game Theory,then focus the effects of different free-riding behaviors on the equilibrium pricing decisions and profit of the manufacture and retailer.Findings as mainly summarized as follows:(1)In the early stage of network development,only the retailer provides the product service for the customers,and the behavior of unidirectional free-riding exists in this dual-channel.Hence,fierce competition caused by free-riding will force the retailer to lower retail price,but manufacturer will raise the price.The profits of the manufacturer and supply chain will increase with the intensification of unidirectional free-riding.But for the retailer,even it provides after-sale service to do consumer retention,its profits are still lower than those for single channel without free-riding.Therefore,the behavior of unidirectional free-riding triggers the channel conflicts.(2)With the development of network information,manufacturers also provide excellent information service in network channels,and the behavior of bidirectional free-riding exists in this dual-channel.On the one hand,the manufacturer will raise the price due to the service free-riding,on the other hand,it will increase the wholesale price to charge fees for information free-riding.The manufacturer and supply chain have benefited from bidirectional free-riding.But the manufacturer has used it leadership to take over most of the profits in the supply chain,which causes greater loss to the retailer's profits.Hence,the behaviors of bidirectional free-riding deepen channel conflicts.(3)Base on the cooperation of after-sale service between the manufacturer and the retailer,the behavior of multiple free-riding will raise the price of the product and reduce the wholesale price,as well as expand market demands.Under certain conditions,the supply chain can gain "Pareto" improvement with the revenue sharing contract.In the dual-supply channel of electronics which free-riding can not be avoided,consumers' multiple free-riding behaviors guided by the cooperation of after-sale service are not only beneficial to all supply chain members,also it can alleviate the channel conflicts.