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http://dx.doi.org/10.11627/jkise.2014.37.4.145

Strategic Analysis of the Multilateral Bargaining among the Manufacturer, the Online and the Offline Distribution Channels  

Cho, Hyung-Rae (Dept. of Industrial Systems Engineering/ERI, Gyeongsang National University)
Rhee, Minho (Dept. of Industrial Systems Engineering/ERI, Gyeongsang National University)
Lim, Sang-Gyu (Dept. of Industrial Systems Engineering/ERI, Gyeongsang National University)
Publication Information
Journal of Korean Society of Industrial and Systems Engineering / v.37, no.4, 2014 , pp. 145-153 More about this Journal
Abstract
In this paper, we study the bargaining strategy of a manufacturer who sells a product through the online and offline distribution channels. To do this, we derive and analyze the equilibrium solutions for both simultaneous and sequential bargaining games. The result shows that the optimal bargaining strategy heavily depends on the size of the online distribution channel's loyal customers and the difference between the retail prices of the online and the offline distribution channels. It is also shown that, in some cases, the online distribution channel has incentive to downsize its loyal customers and its retail price for a better bargaining outcome.
Keywords
Multilateral Bargaining; Simultaneous Bargaining; Sequential Bargaining; Nash Equilibrium Solution;
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