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| Notation | Description |
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| Manufacturer ’s unit cost of product , |
| Wholesale price at which manufacturer distributes product to the retailer |
| Unit retail price at which the retailer sells product to final customers by the traditional channel |
| Unit retail price at which the manufacturer sells product 1 to final customers by its online channel |
| Service level of product 1 in both the direct channel and the traditional retail channel |
| Primary market base of product 1 of the online sales channel |
| Primary market base of product of the traditional retail channel |
| Sensitivity of product 1 in both the direct channel and the traditional retail channel |
| Sensitivity of product 2 in the traditional retail channel |
| Cross-price sensitivity coefficient of product 1 in both the direct channel and the traditional retail channel |
| Complementarity level between product 1 in the direct channel and product 2 in the traditional retail channel |
| Complementarity level between products 1 and 2 in the traditional retail channel |
| Service sensitivity coefficient of the demand in the direct channel |
| Service sensitivity coefficient of the demand in the traditional retail channel |
| Service cost coefficient |
| Consumer demand for product 1 through the online sales channel |
| Consumer demand for product 1 through the traditional retail channel |
| Consumer demand for product 2 through the traditional retail channel |
| and | Manufacturer and retailer profits, respectively, . |
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