Online Manufacturer Referral to Heterogeneous Retailers

Online Manufacturer Referral to Heterogeneous Retailers

0.00 Avg rating0 Votes
Article ID: iaor2016452
Volume: 24
Issue: 11
Start Page Number: 1768
End Page Number: 1782
Publication Date: Nov 2015
Journal: Production and Operations Management
Authors: , , ,
Keywords: internet, e-commerce, retailing, marketing, behaviour, information
Abstract:

Since the development of the Internet, thousands of manufacturers have been referring consumers visiting their websites to some or all of their retailers. Through a model with one manufacturer and two heterogeneous retailers, we investigate whether it is an equilibrium for the manufacturer to refer consumers exclusively to a retailer or nonexclusively to both retailers. Our analysis indicates that nonexclusive referral is the manufacturer's equilibrium choice if the referral segment market size is sufficiently large; otherwise, exclusive referral is the equilibrium choice. In exclusive referral, the manufacturer would refer consumers to the more cost‐efficient and smaller retailer. In the presence of infomediary referral, it is less likely for both exclusive and nonexclusive referrals to be an equilibrium, as the infomediary referral segment grows. We also show our qualitative results are robust even if there were price discrimination among consumers, referral position disparity, local consumers, and asymmetric referral market sizes.

Reviews

Required fields are marked *. Your email address will not be published.