Supplier Encroachment with a Dual-Purpose Retailer

• 成果类型: Article
• 署名作者: Wang, Ningning; Li, Zhuoxin
• 署名单位: China University of Petroleum; Boston College
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13400
• 发表日期: 2021
• 页码: 2672-2688
• 关键词: supplier encroachment; dual‐ purpose corporations; dual channels; Corporate social responsibility

摘要

The development of e-commerce has greatly facilitated the practice that suppliers encroach upon the retail realm of downstream retailers through direct channels (e.g., online stores). The literature in this area has investigated profit-maximizing firms, but the role of other organizational structures is not well understood. This study studies supplier encroachment in which the retailer is a dual-purpose corporation that pursues his own profit as well as consumer surplus. We find that the retailer's pursuit of consumer surplus can not only intensify market competition and thus reducing the margin of direct selling, but also motivate the encroaching supplier to set a higher wholesale price compared with the case of no encroachment. The presence of a dual-purpose retailer reduces the effectiveness of using the wholesale price as a lever by the supplier. Therefore, encroaching upon a dual-purpose retailer can hurt the supplier. We examine whether a retailer can benefit from being a dual-purpose corporation and how the retailer's dual objectives affect consumer surplus. Interestingly, a dual-purpose retailer can earn a higher profit than a for-profit retailer as the dual-purpose structure helps deter encroachment (i.e., doing well by doing good). Also, consumer surplus in the case of a dual-purpose retailer can be lower than that with a for-profit retailer. This is because the commitment to be a dual-purpose retailer reduces supplier encroachment and thus reduces the total quantity sold to consumers.