Products Quality Control Strategy of Distribution Channel with Duopoly Retailers

Abstract

Abstract:

Based on four-stage Stackelberg dynamic game analysis, this paper constructs products quality control model of distribution channel with duopoly retailers, analyzes different parameter variables' effect on the making of product quality control strategy in traditional retail channel and mixed channel, and studies how to make product quality control strategy when the supplier adopts decentralized decision and centralized decision. Through the model analysis, we demonstrate that supplier's product quality level will increase with the increasing of retailers' adding value service level, and it will decrease with the increasing of customer's demand price elasticity; the retail price, wholesale price, customer demands and supplier's expected profits will increase and retailers' expected profits will decrease with the increasing of added value service level; when supplier makes centralized decision in traditional retail channel, the products quality level is in proportion to the sum of duopoly retailers' added value service level, when supplier makes centralized decision in mixed channel, the products quality level will be higher than when only electronic direct channel exists and lower than when traditional retail channel exists, and then it will arouse customer's potential demands, the market demands will be the maximum and thus eliminate the double marginalization effect. Finally, we conduct a numerical example which indicates a direction in practice for further specific application.

Key words: duopoly retailers, distribution channel, Stackelberg dynamic game, decentralized decision, centralized decision

Zhu Lilong. Products Quality Control Strategy of Distribution Channel with Duopoly Retailers[J]. , 2016, 28(10): 239-249.

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