Channel coordination mechanism with retailers having fairness preference---An improved quantity discount mechanism

Chuan Ding; Kaihong Wang; Shaoyong Lai

doi:10.3934/jimo.2013.9.967

Article Contents

2013, Volume 9, Issue 4: 967-982. Doi: 10.3934/jimo.2013.9.967

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Channel coordination mechanism with retailers having fairness preference ---An improved quantity discount mechanism

1.
School of Economics and Mathematics, Southwestern University of Finance and Economics, 610074, Chengdu

Received: November 2012

Revised: June 2013

Published: October 2013

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Abstract

Channel coordination is an optimal state with operation of channel. For achieving channel coordination, we present a quantity discount mechanism based on a fairness preference theory. Game models of the channel discount mechanism are constructed based on the entirely rationality and self-interest. The study shows that as long as the degree of attention (parameters) of retailer to manufacturer's profit and the fairness preference coefficients (parameters) of retailers satisfy certain conditions, channel coordination can be achieved by setting a simple wholesale price and fixed costs. We also discuss the allocation method of channel coordination profit, the allocation method ensure that retailer's profit is equal to the profit of independent decision-making, and manufacturer's profit is raised.

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Mathematics Subject Classification: Primary: 90B60, 90B50; Secondary: 91A10.

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