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Mathematical Problems in Engineering
Volume 2016 (2016), Article ID 9132310, 12 pages
http://dx.doi.org/10.1155/2016/9132310
Research Article

Increasing Channel Profit in the Sale of Durable Goods

School of Economics and Business Administration, Chongqing University, Chongqing, China

Received 22 April 2016; Revised 3 November 2016; Accepted 6 November 2016

Academic Editor: Laura Gardini

Copyright © 2016 Nian Guo and Zhongkai Xiong. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Both time inconsistency and double marginalization are important issues in the sale of durable goods. In particular, when a durable goods manufacturer sells her product through a conventional retail store, the intrinsic double marginalization would alleviate time inconsistency to some extent. However, current research pays no attention on the interaction between both issues under multiple-retailer and manufacturer encroachment scenarios. To fill this gap, in this paper, we study these two channel structures in the sale of durable goods. Our analysis reveals that channel profit in the multiple-retailer structure is always greater than that under integration. On the other hand, the manufacturer encroachment structure can eliminate both bad effects without commitment under some circumstances and the whole channel is well coordinated.