Fairness and channel coordination

Fairness and channel coordination

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Article ID: iaor20082502
Country: United States
Volume: 53
Issue: 8
Start Page Number: 1303
End Page Number: 1314
Publication Date: Aug 2007
Journal: Management Science
Authors: , ,
Keywords: measurement, retailing
Abstract:

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.

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