Optimal quality and quantity provisions for centralized vs. decentralized distribution : market size uncertainty effects

We provide insights on how market size uncertainty affects the optimal quality (quantity) provision in distribution channels when consumers are heterogeneous in their willingness to pay for product quality. In this context, we denote the difference between the manufacturer’s optimal quality (quantit...

全面介紹

Saved in:
書目詳細資料
Main Authors: Liu, Yan, Shi, Hongyan, Petruzzi, Nicholas C.
其他作者: Nanyang Business School
格式: Article
語言:English
出版: 2019
主題:
在線閱讀:https://hdl.handle.net/10356/90788
http://hdl.handle.net/10220/48506
標簽: 添加標簽
沒有標簽, 成為第一個標記此記錄!
實物特徵
總結:We provide insights on how market size uncertainty affects the optimal quality (quantity) provision in distribution channels when consumers are heterogeneous in their willingness to pay for product quality. In this context, we denote the difference between the manufacturer’s optimal quality (quantity) provision for a centralized channel and its optimal analog for a decentralized channel as the quality (quantity) differential. We find that market size uncertainty creates or increases the quantity differential, but it does not affect the differential’s polarity. In contrast, market size uncertainty decreases the quality differential and it does so to the extent that, depending on the level of consumer heterogeneity, it reverses the differential’s polarity. Moreover, we find that the higher the inherent uncertainty level, the more pronounced are the effects. We likewise find that the effects of market size uncertainty are amplified if the notion of consumer heterogeneity is replaced with retail-level competition.