The structure of equilibrium marketing channels: Common versus exclusive retailers

Coordination and control are critical aspects in the design of marketing channels due to the interdependence of various channel members and the complex flow of products, title to the products, payments and information. Important marketing decisions, such as prices and the level of promotional services, are often delegated to members of the marketing channel with divergent individual incentives. In this dissertation, I study equilibria in marketing channels in a differentiated product duopoly consisting of a single common retailer and two exclusive retailers. Interactions due to retail prices and the level of unobservable promotional effort provided by the retailer(s) contribute to interdependence of marketing decisions. Both exclusive retailers and common retailers will be observed in equilibrium marketing channels. If linear (one-part) wholesale prices are used in transactions between manufacturers and retailers, the argument that a common retailer is a device to implement collusive outcomes among manufacturers is questionable. The negative cross elasticity of competing products results in a higher markup by a common retailer than an exclusive retailer. The higher retail prices with a common retailer results in less intensive competition. Utilizing a common retailer has the beneficial effect of softening the competition among manufacturers. If the promotional services are predatory, the common retailer provides lower levels of promotional services than would exclusive retailers. This has a negative impact on manufacturers' profits. A common retailer will be utilized when the products are close substitutes, promotional services are not very predatory, and the provision of promotional services is not very costly.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Business Administration

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2011

Author dc:creator

• Vemuri, Vijaya Kumar

Contributors dc:contributor

• Monahan, George E.

• Business Administration, General
• Business Administration, Marketing

Statement dc:rights

• Copyright 1996 Vemuri, Vijaya Kumar

Language dc:language

eng

Identifier

9780591088823
AAI9702699
(UMI)AAI9702699

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/19836