Date of this Version
We incorporate the concept of fairness in a conventional dyadic channel to investigate how fairness may affect channel coordination. We show that when channel members are concerned about fairness, the manufacturer can use a simple wholesale price above her marginal cost to coordinate this channel both in terms of achieving the maximum channel profit and in terms of attaining the maximum channel utility. Thus, channel coordination may not require an elaborate pricing contract. A constant wholesale price will do.
Originally published in Management Science © 2007 INFORMS
This is a pre-publication version. The final version is available at http://dx.doi.org/10.1287/mnsc.1060.0697
distribution channels, fairness, channel coordination, behavioral economics, retailing and wholesaling, pricing
Cui, T., Raju, J. S., & Zhang, Z. (2007). Fairness and Channel Coordination. Management Science, 53 (8), 1303-1314. http://dx.doi.org/10.1287/mnsc.1060.0697
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Date Posted: 15 June 2018
This document has been peer reviewed.