Business, Management and Accounting
8 years ago

Manufacturers Opt for Direct Channels, Shifting Retailers' Profits in Pricing Model.

A uniform pricing and channel selection model with random demand
Ming Lei, Xiangdong Liu, Haichao Ma

Paper Summary

The article discusses how manufacturers set wholesale prices, leading retailers to adjust their retail prices, marketing efforts, and order quantities. The researchers found that when demand follows a certain pattern, they could find the right balance. However, with a different demand pattern, they couldn't find the right balance. Manufacturers tend to choose direct channels with lower costs, affecting retailers' profits.

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