A Note on Optimal Selling to Asymmetric Retailers

I consider a channel with one manufacturer selling the same product to two retailers engaged in imperfect competition. The retailers are asymmetric because one has a lower marginal selling cost (or a higher demand potential) than the other. I design the manufacturer's optimal selling mechanism, whereby the manufacturer must offer the same contract options to both retailers. I fully characterize the manufacturer's optimal selling mechanism for varying degrees of retailer asymmetry and competition intensity. I find that under certain conditions, the manufacturer is better off selling a larger quantity through the high‐cost (or low‐demand potential) retailer. I also show how the optimal mechanism can be implemented using a menu of two‐part tariffs with quantity controls.

• 저널Production and Operations Management · 22(5) · 1118–1125
• 토픽Consumer Market Behavior and Pricing · Marketing
• DOI10.1111/poms.12008
• 저자Dimitris Kostamis