One‐Stop Shopping Behavior,Buyer Power and Upstream Merger Incentives

We analyze how consumer preferences for one‐stop shopping affect the (Nash) bargaining relationships between a retailer and its suppliers. One‐stop shopping preferences create ‘demand complementarities’ among otherwise independent products which lead to two opposing effects on upstream merger incentives: first a standard double mark‐up problem and second a bargaining effect. The former creates merger incentives while the later induces suppliers to bargain separately. When buyer power becomes large enough, then suppliers stay separated which raises final good prices. We also show that our result can be obtained when wholesale prices are determined in a non‐cooperative game and under two‐part tariffs.     

Power shifts and relationship quality improvement of producer–retailer green channel dyads under government intervention

This work presents an analytical model to investigate the effect of government intervention on green channel performance in a producer–retailer green channel dyad via the mediating effects of channel power shifts and relationship quality improvement. The retailer is allocated additional responsibility to collect used products for a producer for recycling and repairing. The proposed model is tested empirically using questionnaire survey data obtained from retailers of the producer–retailer green channels of consumer electronic products in Taiwan. Analytical results indicate that government intervention has positive effect on green channel performance when the producer adopts joint action measures. The producer can utilize joint action as a non-coercive influential strategy to alleviate a target member's countervailing power and bargaining power and to improve channel relationship quality, thereby enhancing green channel performance under government intervention to adopt extended producer responsibility.     

ASSESSING THE IMPACT OF RETAILER STORE BRAND PRESENCE ON MANUFACTURER BRANDS IN AN EQUILIBRIUM FRAMEWORK*

This article assesses the impact of retailer store brand products on manufacturer brand prices, profitability and consumer welfare in Boston's white fluid milk market. Estimates from a random coefficients logit demand model are used to specify and test a set of pricing games. Under the selected model, milk manufacturers are Stackelberg leaders to retailers, and store brand milks are procured by retailers at cost. The model is used to investigate counterfactual markets without retailer store brand milks. Counterfactual Simulation results indicate that store brands increase channel profits, retailer profits and consumer welfare, while having mixed effects on equilibrium retail prices.     

Manufacturer's retailer dependence: A private branding perspective

With the recent increase in the power of major retailers through consolidations, the world of brands has divided in two categories: national brands belonging to manufacturers and private brands belonging to retailers. While national brands are well studied in the literature, there is a dearth of studies on private brand phenomenon particularly from a manufacturer's point of view as opposed to that of retailers and consumers. To address this gap, we explore the antecedents and consequences of a manufacturer's private brand retailer dependence with a focus on the manufacturer's relationship with retailers. Drawing on the Resource Dependence Theory and Transaction Cost Economics, we examine various products and market characteristics as potential antecedents of a manufacturer's private brand retailer dependence while adopting private brand sales growth and returns from private brand production as outcomes using a sample of 153 South Korean manufacturers currently involved in private brand production. The results show that the private brand retailer dependence of a manufacturer leads to private brand sales growth directly and returns from private brand production indirectly through private brand sales growth, and has a negative effect on return from private brand production directly. Furthermore, product characteristics, such as product innovativeness through collaboration with retailers and search goods, and market characteristics, such as high retailer power and knowledge specificity of a retailer, increase a manufacturer's private brand retailer dependence and, therefore, private brand sales growth. The theoretical and managerial implications of the findings are discussed at the end.     

基于利他行为下的闭环供应链决策研究

随着行为运营管理的发展,利他、公平、信任等行为得到广泛的关注。文章构建一个由供应商和零售商的闭环供应链,供应商负责旧产品回收再加工。将利他行为引入到供应链中,研究利他属性对供应链决策的影响。研究发现,在该模型的供应链中,供应商的利他属性,对于供应链的回收率、零售商的利润、供应商的效用、供应链的整体利润都是有益的。而零售商的利他行为,有利也有弊,带来的效益是局部的。然后通过数值分析对结论作出解释和说明。     

The competition effects of industry-wide vertical price fixing in bilateral oligopoly

This paper examines the competition and welfare effects of vertical price fixing through industry-wide resale price maintenance (RPM) arrangements, such as those benefiting from exemption from a general prohibition against RPM. A bilateral oligopoly framework is employed incorporating differentiation between manufacturer products and between retailer services. Transactions between the stages involve prices being determined through bargaining. We do not find RPM to be universally undesirable. However where retailer power is strong, the social effects of RPM are likely to be adverse, since the practice can assist in coordinating final price levels and prevent socially desirable countervailing power arising.     

上海家化出海记

在日化行业,罕有由"东"向"西"的文化倒流,佰草集是一个开始。前不久,全球最大化妆品零售商丝芙兰(Sephora)在巴黎召开的2008年下半年化妆品新品发布会的现场,被布置成了中式庭院风格,象征上海家化旗下的高端中草药化妆品牌——佰草集——形     

EXCLUSIVE QUALITY*

In the case of vertically differentiated products, Bertrand competition at the retail level does not prevent an incumbent upstream firm from using exclusivity contracts to deter the entry of a high‐quality rival. Indeed, because of differentiation, the incumbent's inferior product is not eliminated upon entry. Due to the resulting competitive pressure, a retailer who considers rejecting the exclusivity contract expects to earn much less than the incumbent's monopoly rents. Thus, in equilibrium, the incumbent can always offer high enough an upfront payment to induce all retailers to sign the contract and achieve exclusion. This is true under linear pricing for intermediate levels of entry costs, and with two‐part tariffs even in the absence of entry costs.     

Inducing Cooperation with a Carrot Instead of a Stick

The Supreme Court’s reasoning in Leegin turned on the insight that manufacturers may use resale price maintenance (RPM) for procompetitive purposes. This paper presents a model of manufacturer-retailer interactions that clarifies why, as a rule, retailers and manufacturers are joint beneficiaries of service-inducing RPM. The model identifies factors that determine how RPM-generated benefits are allocated between a manufacturer and its retailers. The paper then shows that manufacturers may use market share discounts (MSD) in lieu of RPM or other vertical restraints to induce retailer performance. The outcomes and efficiency effects that are achieved with RPM can be replicated and usually surpassed if manufacturers substitute MSD for RPM, thereby enabling a manufacturer to retain all incremental profit rather than conceding some of it to retailers.     

非对称信息下再制造产品质量控制决策研究

本文研究了风险中性的单再制造商与单销售商构建的二级闭环供应链模型,基于博弈论和委托代理理论。在不同回收水平下,再制造商都存在单边道德风险,销售商根据影响再制造商质量预防水平的因素来引导再制造商的决策,并制定激励契约来降低再制造商的道德风险,以达到闭环供应链协调的目的。研究表明：回收水平和质量检测水平均影响再制造商的质量预防水平,回收水平同质量预防水平呈正相关,质量检测水平同质量预防水平呈负相关;在不同回收水平下,通过销售商质量检测控制后,闭环供应链收益增加,同时求得最优控制水平和最优契约金额。在最后,通过算例分析验证了契约的有效性。     

Vertical integration versus vertical separation: An equilibrium model

In this paper, the role of strategic forces in vertical relationships is examined. Using a simple model of differentiated products with symmetric demands and costs, the Perfect equilibrium to a vertical integration-vertical separation game between manufacturers is determined. Given the assumptions of the model, I show that the manufacturer's decision whether to vertically integrate or to remain separate from its retailer depends on the degree of product differentiation. I show that when the products are poor substitutes, the only Perfect equilibrium is vertical integration by both manufacturers. As the products become closer substitutes, an additional Perfect equilibrium appears, both firms vertically separated. For manufacturers, the vertically separated equilibrium always Pareto dominates the vertical integration equilibrium when both equilibria exist.This paper is a revision of Chapter 4 of my Ph.D. dissertation. I wish to thank my Senior Supervisor, Professor Thomas W. Ross, for his many helpful comments. An earlier version of this paper was presented at the Canadian Economic Association meetings in Kingston, June 1991. Helpful comments and suggestions were also received from Keith Acheson, Leigh Anderson, Jeffrey Church, Chantale Lacasse, Frank Mathewson, and Don McFetridge and two anonymous referees. I am responsible for any errors or omissions.     

Pivotal Buyers and Bargaining Position

Securing sales to a large buyer can be pivotal to a supplier's decision to produce. While conventional wisdom suggests that being pivotal improves a buyer's bargaining position, the opposite is shown in a multilateral bargaining model. If other buyers' payments fall short of costs, a pivotal buyer must cover the shortfall or forfeit consumption. This affords leverage that the supplier lacks when bargaining with non-pivotal buyers. The analysis illuminates contracting in markets with high fixed costs, such as cable television programming, motion pictures, and large-scale project finance, and has implications for the FCC's horizontal ownership limits on cable system operators.     

Product substitution in different weights and brands considering customer segmentation and panic buying behavior

Due to recent supply disruptions, there has been a rapid increase in panic buying. This study considers a wholesaler selling two brands of a product with multiple weights and produced by different manufacturers to multiple retailers. The products are substituted based on weight (same brand) and a competitor’s brand over two periods. In the first period (panic situation), the wholesaler attempts to retain the inventory to satisfy the retailer. In the second period (supply disruption), retailers are willing to accept the substitute products. The wholesaler segregates the retailers into high and low indexed customers, where the high indexed retailers (provide higher profit) order greater quantities than the low indexed retailers. The objective of this model is to determine the optimal numbers for ordering quantities and substitutions to maximize total profit. Moreover, supply disruption for both single and multiple brands is analyzed, along with the influence of different degrees of supply disruption and panic rate on decisions and profits. Finally, we compare the models with and without customer-segmented substitution and brand substitution. In addition, other model extensions are discussed, such as an increase in the price in the second period.     

Stakeholder value appropriation: The case of labor in the worldwide mining industry

Research Summary : We evaluate how the value appropriated by employees varies in response to an exogenous shock to the price of the firm's product and how this variation depends on institutional and ownership structures. Institutional and ownership structures that favor employees can influence firms’ location decisions and shareholders’ incentives to invest. Using data from the main copper mines in the world, we show that the value appropriated by employees rises in response to an exogenous increase in the price of minerals. Our results indicate that the magnitude of the increment in the value captured by employees is larger in stated‐owned companies, when labor regulations promote productivity‐based payments, when wages are determined through a centralized bargaining process, and when regulations associated with hiring and firing are more flexible. Managerial Summary : We show how labor regulations and state ownership affect the value appropriated by employees when there are exogenous changes in the price of the firm's products. Since the value generated by a firm is distributed among different stakeholders, a higher appropriation of value by employees results in lower appropriation by another party. Therefore, by changing the distribution of value, managerial decisions about location and entry could be affected. For instance, shareholders of firms with positive future expectations about the prices of their products might prefer to enter markets in which salary negotiations are not centralized or where partnership with the local government is not mandatory. Overall, our analysis calls for the consideration of the external environment when evaluating value appropriation by different types of stakeholders.     

Lump-Sum Payments and Retail Services: A Relational Contracting Perspective*

How should manufacturers motivate their retailers to provide customer services? The vertical restraints literature tells us that retail competition distorts service incentives in the short run. We consider how repeated interaction mitigates this problem, and particularly how a manufacturer can provide service incentives with discretionary lump-sum payments. We find that these payments may allow the manufacturer to sustain optimal service levels even if retailers are very impatient. We also show that banning reverse lump-sum payments may deprive consumers of the chance to enjoy high-quality services, and thereby reduce their welfare.     

基于产量碳配额分配对竞争性闭环供应链定价及回收影响研究

针对当前节能减排和资源回收的趋势,本文综合考虑了碳排放与资源回收问题,研究了基于产量的碳配额分配对闭环供应链定价以及回收的影响。简化模型由两个制造商、零售商和第三方回收机构等4个主体构成。研究发现,当碳配额有偿分配时,此时满足供应链参与主体利 润最大化的零售价格和批发价格均会升高,回收率相比无碳排放限制时降低,但是当再造品 碳排放量少于新产品的碳排放量时,有偿分配碳配额会促使回收率上升;同时本文最后提出了“共同但有区别”的碳配额分配政策,分析结果表明可以较为有效消除碳配额有偿分配对于回收的不利影响,研究结果对以后政府制定碳减排环境下废旧物品回收相关政策也提供了依据。     

ANOTHER LOOK AT PRICE PROMOTION*

Weekly sales at retail stores exhibit several patterns that the literature on price promotion does not fully capture. In this paper we develop a simple symmetric model where duopoly manufacturers distribute through a monopoly retailer to serve consumers with heterogeneous reservation prices. We show that the heterogeneity in consumers' reservation prices coupled with the retailer's market power is sufficient to resolve the deficiency in the literature. We then show that, while pricing patterns under this model differ significantly from those under a model where the retailer has no market power, the manufacturers' expected profits are the same in both cases.     

Optimal inventory policy with noninstantaneous receipt under trade credit

In the last two decades, the models for inventory replenishment policies under trade credit have been widely studied by several researchers. However, the extant papers only consider the effects of permissible delay in payments in the inventory systems. In some situations, the supplier also may offer a cash discount to encourage retailer to pay for his purchases quickly. On the other hand, an inventory model with instantaneous receipt is not a common feature in actual practice. For generality, this study develops an inventory model with noninstantaneous receipt under trade credit, in which the supplier provides not only a permissible delay but also a cash discount to the retailer. We then characterize the optimal solution and provide an easy-to-use criterion to find the optimal order strategies. Finally, several numerical examples are presented to illustrate the theoretical results.     

Delegating slotting allowance authority to the sales force

Slotting allowances are payments manufacturers make to retailers in exchange for product distribution. An important question manufacturers face is whether their salespeople should have the authority to allocate these payments and, if so, what are the implications of doing so. Unfortunately, although slotting allowances have been investigated in the literature, there is little guidance on these issues. Providing such guidance is important because slotting allowances are both costly to manufacturers and frequently demanded by retailers. Therefore, we introduce slotting allowance authority into the literature and suggest that it is positively related to customer loyalty toward the salesperson; however, this relationship largely depends on a customer's relationship motivation. Specifically, we offer a contemporary view of customer motivation by demonstrating that the relationship between slotting allowance authority and customer loyalty is less and more positive with increasing levels of intrinsic relationship motivation and extrinsic relationship motivation, respectively. Moreover, our results indicate a conditional process model whereby slotting allowance authority impacts sales growth through customer loyalty conditioned upon intrinsic- and extrinsic relationship motivations.     

Price authority and information sharing with competing supply chains

We characterize the degree of price discretion that two competing manufacturers grant their retailers in a framework where demand is uncertain and privately observed by the retailers, while manufacturers only learn it probabilistically. In contrast with the consolidated vertical contracting literature, we assume that manufacturers cannot use monetary incentives to align the retailers’ incentives to pass on their unverifiable distribution costs to consumers. Our objective is to study how, in this context, an information-sharing agreement according to which manufacturers share their demand information affects prices, profits and consumer surplus. While equilibria with full price delegation never exist, regardless of whether manufacturers share information, partial delegation equilibria may exist with and without the exchange of information. These equilibria feature binding price caps (list prices) that prevent retailers from passing on their distribution costs to consumers, and are more likely to occur when manufacturers exchange demand information than when they do not share this information. Manufacturers profit from exchanging demand information when products are sufficiently differentiated, and retailers’ distribution costs are high enough. Yet, expected prices are unambiguously lower when manufacturers exchange demand information than when they don’t, making the information exchange beneficial to consumers.