Stackelberg Game analysis on distribution channel product quality strategy between competitive producers

Zhu Lilong; Yao Chang

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Science Research Management ›› 2013, Vol. 34 ›› Issue (9) : 139-150.

Stackelberg Game analysis on distribution channel product quality strategy between competitive producers

Zhu Lilong^1,3, Yao Chang^1,2

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Abstract

This paper constructs the three-echelon stackelberg game model which consists of two competitive producers, two retailers and the end customers, and studies how to make quality strategies in designing the distribution channels of the two competitive producers. It also develops three types of strategy models of the producer distribution channel (the direct channel strategy, indirect channel strategy and mixed channel strategy), and analyzes impact of the distribution channel strategy on the producer's product quality decision, the retailer's product purchase decision, the expected profits function and the customer's consumer surplus. Compared with the direct channel strategy, when the producer chooses the indirect channel strategy, the product quality level and the retailing price will both be reduced and the consumer surplus will also be decreased finally. However, when the low quality producer chooses the indirect channel strategy, the consumer surplus will be increased. These conclusions will be a strong complement in the research field of distribution channel quality strategy. Finally, an example analysis is conducted and the numerical computing results prove the model's effectiveness and the conclusion's correctness, both of which will indicate the further specific application direction in practice.

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competitive producers / distribution channel / quality strategy / stackelberg game

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Zhu Lilong, Yao Chang. Stackelberg Game analysis on distribution channel product quality strategy between competitive producers[J]. Science Research Management. 2013, 34(9): 139-150

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