Journal
MANAGEMENT SCIENCE
Volume 55, Issue 8, Pages 1347-1352Publisher
INFORMS
DOI: 10.1287/mnsc.1090.1023
Keywords
failure rates; pricing; product quality; distribution channel
Ask authors/readers for more resources
This paper studies a joint pricing and product quality decision problem in a distribution channel, in which a manufacturer sells a product through a retailer. The manufacturer jointly determines the wholesale price and quality of the product, and the retailer determines the retail price. We find that if the marginal revenue function is strictly concave, then the manufacturer chooses a lower product quality level than if selling the product directly to customers. If the marginal revenue function is affine, then the manufacturer's optimal product quality decision is independent of the distribution channel structure. If the marginal revenue function is strictly convex, then the manufacturer chooses a higher product quality level than if selling the product directly to customers.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available