Journal
TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW
Volume 128, Issue -, Pages 191-211Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.tre.2019.05.018
Keywords
Encroachment; Cost reduction; Asymmetric information; Signaling game; Supply chain management
Categories
Funding
- National Natural Science Foundation of China [61473204, 71771164, 71671081, 71331004]
- Natural Sciences and Engineering Research Council of Canada
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This paper considers manufacturer encroachment with the cost reduction decision under either asymmetric or symmetric demand information. By solving a signaling game, we find that encroachment motivates the manufacturer to invest more in cost reduction if and only if the direct selling channel is relatively efficient. Furthermore, both members benefit from the cost reduction action without encroachment, while encroachment allows the manufacturer to monopolize all of the benefit. In addition, encroachment benefits the manufacturer when the direct selling cost is sufficiently low, while it benefits the retailer when this cost is sufficiently high. Finally, we obtain some insights into information management.
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