returns with wholesale price discount contract in a newsvendor problem abstract we consider a newsvendor problem in a supply chain that consists of a manufacturer and a retailer the manufacturer is the stackelberg leader and the retailer is the follower we examine how the manufacturer can contract a wholesale price only agreement with its retailer that maximizes its profit we also propose a returns policy with a wholesale price discount scheme returns discount contract that can achieve supply chain coordination using the wholesale price only contract as a benchmark we show how the manufacturer sets a discounted wholesale price in a returns discount contract that enhances both profits of the manufacturer and the retailer as well as improves the supply chain efficiency

optimal pricing and return policies for perishable commodities this paper considers the pricing decision faced by a producer of a commodity with a short shelf or demand life a hierarchical model is developed and the results of the single period inventory model are used to examine possible pricing and return policies the paper shows that several such policies currently in effect are suboptimal these include those where the manufacturer offers retailers full credit for all unsold goods or where no returns of unsold goods are permitted the paper also demonstrates that a policy whereby a manufacturer offers retailers full credit for a partial return of goods may achieve channel coordination but that the optimal return allowance will be a function of retailer demand therefore such a policy cannot be optimal in a multi retailer environment it is proven however that a pricing and return policy in which a manufacturer offers retailers a partial credit for all unsold goods can achieve channel coordination in a multi retailer environment this article was originally published in marketing science volume 4 issue 2 pages 166 176 in 1985

vertical control of price and inventory this paper offers a simple approach to the theory of decentralizing inventory and pricing decisions along a supply chain we consider an upstream manufacturer selling to two outlets which compete as differentiated duopolists and face uncertain demand demand spillovers between the outlets arise in the event of stockouts the price mechanism in which each outlet pays a two part price and chooses price and inventory virtually never coordinates incentives efficiently contracts that can elicit first best decisions include resale price floors or buy back policies retailer held options to sell inventory back to the manufacturers

remanufacturing as a marketing strategy the profitability of remanufacturing systems for different cost technology and logistics structures has been extensively investigated in the literature we provide an alternative and somewhat complementary approach that considers demand related issues such as the existence of green segments original equipment manufacturer competition and product life cycle effects the profitability of a remanufacturing system strongly depends on these issues as well as on their interactions for a monopolist we show that there exist thresholds on the remanufacturing cost savings the green segment size market growth rate and consumer valuations for the remanufactured products above which remanufacturing is profitable more important we show that under competition remanufacturing can become an effective marketing strategy which allows the manufacturer to defend its market share via price discrimination

research note quantity discounts in differentiated consumer product markets in this paper we extend the standard hotelling model of product differentiation to incorporate a second dimension of consumer heterogeneity that relates to the quantity of the product consumers wish to buy this extension allows us to derive optimal nonlinear pricing rules chosen by competing sellers when offering differentiated products in the marketplace it also permits us to assess whether sellers find it optimal to offer quantity discounts in such a setting and the implications of such discounts on their profitability we find that offering quantity discounts corresponds indeed to equilibrium behavior the extent of discounting declines the less differentiated the products surprisingly when sellers offer to consumers a choice between two different sized packages their profits are at most as high as when such a choice is unavailable moreover when utilizing nonlinear pricing rules is not feasible the profits of the sellers actually decline when they offer consumers a choice between different sized packages a limited empirical investigation supports the comparative statics we derive in our theoretical model

managing product returns to achieve supply chain sustainability an exploratory study and research propositions abstract the aim of this article is to develop research propositions for product returns management using the institutional theory int as the foundation for the study the paper culminates with a research model based on this theoretical perspective to examine the input and output of product returns management as part of a comprehensive sustainability effort the study is exploratory in nature based on five case studies of participating manufacturers in the automotive and electrical and electronics industry in malaysia the interview results reveal that the five participating companies established a product returns management program to handle three types of product returns found in their organizations this is not surprising because successful product returns management has a number of internal and external benefits to the firms our interviews also uncover that the abundant amount of product returns is pressing these companies to implement an effective product returns management program based on the primary and secondary data collected in this study three propositions are developed for future research which should be tested with a large empirical data set to strengthen the theoretical contributions and managerial implications of this study

long run competition in capacity short run competition in price and the cournot model in this article we investigate the nature of equilibrium in markets in which firms choose the scale of operation before they make pricing decisions we analyze a duopoly model in which firms choose their capacities before engaging in bertrand like price competition we demonstrate that the cournot outcome is unlikely to emerge in such markets and that the equilibrium tends to be more competitive than the cournot model would predict in addition our results indicate a tendency toward asymmetric firm sizes and price dispersion that results from the mixed strategies firms use in equilibrium

the transferability and depletability of externalities abstract this paper is concerned with symmetry and asymmetry in pollution pricing as conditions for the attainment of a pareto optimum in pollution pricing it has already been claimed freeman j environ econom manage 8 321 329 1984 that for both depletable and undepletable externalities pollution pricing should be asymmetric it is shown in this paper that the relevant distinction is not between depletable and undepletable externalities rather it is between transferable and non transferable externalities the effects of which can or cannot be transferred by the recipient to another party optimality requires symmetric pricing for transferable externalities and asymmetric pricing for non transferable externalities

coordinating a decentralized supply chain with customer returns and price dependent stochastic demand using a buyback policy abstract we investigate a decentralized supply chain that consists of a manufacturer and a retailer where the retailer simultaneously determines the retail price and order quantity while experiencing customer returns and price dependent stochastic demand we propose an agreement between the manufacturer and the retailer that includes two buyback prices one for unsold inventory and a second for customer returns and show that this type of easy to implement agreement can achieve perfect supply chain coordination and be a win win for both manufacturer and retailer when a complementary profit sharing agreement is included

price and order postponement in a decentralized newsvendor model with multiplicative and price dependent demand we analyze the effect of price and order postponement in a decentralized newsvendor model with multiplicative and price dependent demand wherein the manufacturer sets the wholesale price and possibly offers a buyback rate and the retailer determines the order quantity and retail price such postponement strategies can be used by the retailer by delaying his operational decisions order quantity and retail price until after demand uncertainty is observed we show how the equilibrium values of the contract parameters and profits are affected by i vertical competition ii type of contract wholesale price only or buyback iii demand distribution iv form of the expected demand function and v the timing of the retailer s operational decisions although in most cases postponement is quite beneficial for the channel members we show that for some model parameters due to vertical competition the expected value of perfect information about demand for price postponement and order postponement may be negative for the channel and even surprisingly for both members we also show that when a buyback option is offered neither order postponement nor price postponement has an effect on the equilibrium wholesale price profit allocation ratio between the manufacturer and the retailer and channel efficiency and that the equilibrium wholesale price expected retail price profit allocation ratio between the manufacturer and the retailer and channel efficiency in the model with buyback options under either order or price postponement further coincide with their counterparts in the corresponding deterministic model

future capacity procurements under unknown demand and increasing costs in this paper we study a situation in which a broker must manage the procurement of a short life cycle product as the broker observes demand for the item she learns about the demand process however as is often the case in practice it becomes either more difficult or more expensive to procure the item as the selling season advances thus the broker must trade off higher procurement costs against the benefit of making ordering decisions with better information about demand problems of this type arise for example in the travel industry where a travel agent s cost of procuring airline and hotel reservations increases as the date of a vacation package approaches we develop a newsvendor like characterization of the optimal procurement policy in a numerical analysis we demonstrate how broker procurements tend to cluster just before price increases and how brokers can benefit from explicitly considering the effects of information about demand in their ordering policies

product quality and return policy in a supply chain under risk aversion of a supplier abstract this study aims to identify the relationship between return policy and product quality decisions in a decentralized system we consider a supply chain situation as in a retail or oem supply chain system where a buyer decides a return policy for consumers and delegates the product quality decision to a supplier we consider the supplier s different risk attitudes whether risk averse or risk neutral a penalty contract is introduced to control the supplier s hidden action conveying external failures due to returns to the supplier we show the conditions for supply chain coordination and demonstrate that product quality enhancement needs to precede a generous return policy setting in view of the prevalent business environment and current supply chain management practices moreover we indicate the optimal conditions for a generous return policy setting without quality enhancement

size and distribution of incomes as determinants of social welfare abstract the paper is concerned with the relationship between the inequality of income distributions and the social welfare they imply starting point is an ordering of income distributions in terms of inequality based on explicit value judgments about the trade off between size and distribution of incomes an ordering in terms of social welfare is derived the welfare functions representing this ordering allow a size distribution split up it is shown that the procedure can be reversed this ordinal approach is considerably more flexible and less arbitrary than most methods proposed in the literature

returns policies between channel partners for durable products many durable products with relatively short selling seasons have been using returns policies between manufacturers and retailers as the contractual protocol for some time recently these sectors have witnessed the growing popularity of peer to peer web based used goods markets as important transaction channels between buyers and sellers given that these two issues are critically linked from both supply and demand perspectives in this paper we study the role that consumer valuation of used products plays in shaping a manufacturer s incentive to offer a returns policy option to a retailer when used goods might be devalued compared to new ones as a result of physical deterioration or obsolescence we do so through a two period dyadic channel framework where the retailer faces uncertain demand for a durable product from a renewable set of customers who are impatient but forward looking the manufacturer on the other hand needs to decide whether or not to offer a returns contract to the retailer we first characterize the necessary and sufficient condition under which a returns contract is the equilibrium strategy as well as the corresponding channel decisions further analysis of this condition reveals that a higher consumer valuation of used products increases the likelihood of a returns contract being the equilibrium strategy this result seems to be robust except when the potential demands for the two periods are quite deterministic and uncorrelated however it contradicts the burgeoning managerial trend to replace returns contracts with price only ones in sectors where used goods are valued relatively highly by the consumers we also discuss how used goods markets affect the equilibrium channel decisions as well as how demand uncertainty and logistics costs associated with returns influence the equilibrium contracting strategy

demand uncertainty and supplier s returns policies for a multi store style good retailer abstract as demand uncertainty grows in the marketplace a critical issue today in most purchase contract negotiations between an independent retailer of a style good and its supplier is the provision of a returns policy i e a commitment by the supplier to buy back unsold inventory of the good at the end of its selling season management science research on the strategic role and optimal design of returns policies has grown in recent years but so far offers little treatment of how exactly the retailer s optimal order quantity decisions are affected by demand uncertainty and how a supplier s returns policy can influence these decisions employing the traditional newsboy problem modeling framework the authors investigate these issues considering a supplier who faces a retailer with two or more store outlets with normally distributed and possibly correlated demands to facilitate their analyses the authors employ a methodology based on special error function representations of the highly nonlinear objective functions of the retailer and supplier utilizing this approach the authors are able to provide explicit insights into how a the buyer s total order quantity decision is affected by the variability in demand b buyback prices in combination with wholesale prices can influence the buyer s order quantity response to demand uncertainty c demand uncertainty moderates the effects of the buyback and wholesale prices d supplier s optimal combination of actions are affected by demand variability e retailer s and supplier s expected profits behave in response to changes in the supplier s actions under different levels of demand variability

demand uncertainty and returns policies for a seasonal product an alternative model abstract marvel and peck international economic review 36 1995 691 714 considered the following seasonal product problem a manufacturer sets wholesale price p w unit and return credit r unit the retailer then sets retailer price p r unit and order quantity q how should the manufacturer set p w and r demand uncertainty consists of two components valuation and customers arrivals our more realistic models reveal effects unobservable from marvel peck s e g i setting r 0 benefits the manufacturer much more than the retailer ii valuation but not customer arrival uncertainty is imperative for the retailer without it the manufacturer can set p w and r such that he reaps most of the profits

bargaining in competing supply chains with uncertainty abstract substantial literature has been devoted to supply chain coordination the majority of this literature ignores competition between supply chains moreover a significant part of this literature focuses on coordination that induce the supply chain members to follow strategies that produce the equilibria chosen by a vertically integrated supply chain this paper investigates the equilibrium behavior of two competing supply chains in the presence of demand uncertainty we consider joint pricing and quantity decisions and competition under three possible supply chain strategies vertical integration vi manufacturer s stackelberg ms and bargaining on the wholesale price bw is the bargaining parameter over a single or infinitely many periods we show that in contrast to earlier literature using vivi vi in both chains is the unique nash equilibrium over one period decision while using msms or bw bw may be nash equilibrium over infinitely many periods

ordering policy and coordination of a supply chain with two period demand uncertainty abstract we develop a two period game model of a one manufacturer and one retailer supply chain to investigate the optimal decisions of the players where stock out and holding costs are incorporated into the model the demand at each period is stochastic and price sharply drops in mid life we assume the retailer has a single order opportunity and decides how much inventory to keep in the middle of selling season we show that both the price protection mid life and end of life returns pme scheme and the only mid life and end of life returns me scheme may achieve channel coordination and access a win win situation under some conditions the larger the lowest expected profit of the retailer the lower the possibility of win win situation will be combined with the analysis of feasible regions for coordination policies we find that pme scheme is not always better than me scheme from the perspective of implementable mechanism finally we find that adopting the dispose down to ddt policy can bring a larger improvement of the expected channel profit in the centralized setting and it is interesting that by using ddt policy double marginalization occurs only at period 1 and however does not plague the retailer in period 2

contingent pricing to reduce price risks the price for a product may be set too low causing the seller to leave money on the table or too high driving away potential buyers contingent pricing can be useful in mitigating these problems in contingent pricing arrangements price is contingent on whether the seller succeeds in obtaining a higher price within a specified period we show that if the probability of obtaining the high price is not too high sellers profit from using contingent pricing while economic efficiency increases the optimal contingent pricing structure depends on the buyer s risk attitude a deep discount is most profitable if buyers are risk prone a consolation reward is most profitable if buyers are risk averse to motivate buyers to participate in a contingent pricing arrangement the seller must provide sufficient incentives consequently buyers also benefit from contingent pricing in addition because the buyers with the highest willingness to pay get the product contingent pricing increases the efficiency of resource allocation

revenue sharing and vertical control in the video rental industry revenue sharing contracts in which retailers pay a royalty on sales to their suppliers are now widely used in the video rental industry we show that revenue sharing is valuable in vertically separated industries in which demand is either stochastic unpredictable or variable e g systematically declining downstream inventory is chosen before demand is realized and downstream firms engage in intrabrand competition unlike two part tariffs revenue sharing achieves the first best outcome by softening retail price competition without distorting retailers inventory decisions our theories are also consistent with trends in prices and availability following retailers adoption of revenue sharing contracts

ranking income distributions a large variety of policy questions involve choices between social states and a consequent ordering of the feasible alternatives when these social states are related to the levels of welfare experienced by individuals or households two central issues stand out in determining the relative desirability of different social outcomes one of these is the essentially positive exercise of achieving comparability between households with different characteristics such as composition or preferences operating in different environments for example facing different price structures the other concerns the normative judgments implicit in the evaluation of alternative allocations of resourcesthe emphasis placed on inequality between households and the extent to which greater inequality can be compensated by higher average living standards this paper focuses on the second of these issues and in doing so we abstract from the problem of household comparability by considering a population of n households identical in all respects except for their incomes the question of ordering social states then becomes one of ranking income distributions over a group of anonymous households or individuals borrowing the usual assumptions imposed on consumer preferences we may suppose that a social ordering of income distributions can be represented by a welfare function 2

the option value of returns theory and empirical evidence when a firm allows the return of previously purchased merchandise it provides customers with an option that has measurable value whereas the option to return merchandise leads to an increase in gross revenue it also creates additional costs selecting an optimal return policy requires balancing both demand and cost implications in this paper we develop a structural model of a consumer s decision to purchase and return an item that nests extant choice models as a special case the model enables a firm to both measure the value to consumers of the return option and balance the costs and benefits of different return policies we apply the model to a sample of data provided by a mail order catalog company we find considerable variation in the value of returns across customers and categories when the option value is large there are large increases in demand for example the option to return women s footwear is worth an average of more than 15 per purchase to customers and increases average purchase rates by more than 50 we illustrate how the model can be used by a retailer to optimize his return policies across categories and customers

an integrated product returns model with logistics and marketing coordination we develop an integrated approach for analyzing logistics and marketing decisions within the context of designing an optimal returns system for a retailer servicing two distinct market segments at the operational level we show that the optimal refund price is not unique moreover it is such that if both market segments return a purchased product then neither segment will receive a full money back refund and it is such that if one or both segments do not return a purchased product then a refund premium over the purchase price is possible but the refund premium will not be enough to offset a customer s total net cost of purchase and return we also show that any improvement to the returns system that results in increased logistical efficiency or marketing effectiveness will be accompanied by an increase in the selling price of the product at the strategic level we show that if the retailer does not coordinate its logistics and marketing efforts to improve the overall returns system then it will tend to over invest in one of the functions and under invest in the other finally we illustrate how our model can be generalized to the case in which a customer s ex post valuation of the product falls along a continuum

the effect of risk aversion on distribution channel contracts implications for return policies the return policy is often used in retailing supply chains however it is controversial in judging their practical value in the literature various theoretical and modeling explanations of why the return policy is used in practice and is preferred by the retailer and manufacturer have been put forth the literature focusing on the channel agents risk attitudes to explain the adoption seems to have led to the conclusion that the two agents preferences for adopting the full return policy over the no return policy are always in conflict and thus the risk attitudes do not explain the adoption of return policy in practice in this paper we reinvestigate this issue we first identify two distinct phases of risk averseness high or low for each of the two agents we show distinct behaviors of how the wholesale price and order size are set in each phase then we show that the full return policy can be preferred over the no return policy by both the agents if both of them are high risk averse this implies that the agents risk attitudes can explain the adoption of return policy this is a new theoretical result which is contrary to the existing understanding in the literature our result highlights the importance and intricacy of channel policies especially when the risk attitudes of agents are considered

an evaluation of does economic inequality breed political conflict studies contradictory findings that economic inequality may have a positive negative or no impact on political conflict are a puzzle for conflict studies three approaches have been used t o explain the inconsistent findings of the ei pc economic inequality political conflict nexus statistical modeling formal modeling and theory building because analysts have tended to possess different research skills these three approaches have been employed in isolation from one another singly however all three approaches have proved deficient and are unlikely to solve the ei pc puzzle the most fruitful approach is to combine the assumptions of the theory builders and the deductive approach of the formal modelers with the various empirical tests of the statistical modelers such an approach to the ei pc puzzle produces a crucial test of the deprived actor and rational actor theories of conflict the approach is also our best hope for solving the other long standing puzzles in conflict studies

deprivation and social exclusion social exclusion manifests itself in the persistent relative lack of an individual s access to functionings compared with other members of society and we model it as being in a state of deprivation over time we view deprivation as having two basic determinants the lack of identification with other members of society and the aggregate alienation experienced by an agent with respect to those having fewer functioning failures using an axiomatic approach we characterize new individual and aggregate measures of deprivation and social exclusion the aggregate measures are then applied to eu data for the period 1994 2001

manufacturer s return policy in a two stage supply chain with two risk averse retailers and random demand abstract this paper studies the manufacturer s return policy and the retailers decisions in a supply chain consisting of one manufacturer and two risk averse retailers under a single period setting with price sensitive random demand we characterize each retailer s risk embedded objective via conditional value at risk and construct manufacturer stackelberg games with and without horizontal price competition between the retailers we explore through numerical studies the effects of the retailers aversion to risk and other parameters on the manufacturer s return policy and profit and the retailers decisions we further investigate the effect of distribution asymmetry by comparing the results with normal and lognormal demand

improving channel coordination through franchising in this paper we explore the role of franchising arrangements in improving coordination between channel members in particular we focus on two elements of the franchising contract namely the royalty structure and the monitoring technology we begin with a simple analysis where a manufacturer distributes its product through a retailer and the retail demand is affected by the retail price and the service provided by the retailer in this context we show that neither royalty payments nor monitoring are needed for full coordination we then extend the model to allow for free riding by franchisees and show that although monitoring helps affect the behavior of the franchisees royalty payments are still unnecessary to coordinate the activities of the franchisor and the franchisees finally we show that in environments where factors affecting retail sales are controlled by both the franchisor and the franchisee royalty payments provide the necessary incentives for the franchisor while monitoring systems are used to ensure that franchisees also behave in the best interest of the channel our general results are found to be consistent with those in brickley and dark 1987 and norton 1988 who conclude that franchising is affected by principal agent problems our theory finds special support in the work of lafontaine 1988 where it is concluded that the incidence of franchising is related to cost of monitoring and the importance of franchisor investments

a bargaining theory of distribution channels abstract a critical factor in channel relationships between manufacturers and retailers is the relative bargaining power of both parties in this article the authors develop a framework to examine bargaining between channel members and demonstrate that the bargaining process actually affects the degree of coordination and that two part tariffs will not be part of the market contract even in a simple one manufacturer one retailer channel to establish the institutional and theoretical bases for these results the authors relax the conventional assumption that the product being exchanged is completely specifiable in a contract they show that the institution of bargaining has force and it affects channel coordination when the complexity of nonspecifiability of the product exchange is present the authors find that greater retailer power promotes channel coordination thus there are conditions in which the presence of a powerful retailer might actually be beneficial to all channel members the authors rec

the right to return this article studies the allocation of responsibility for unsold inventory provision for which is made in practically every distribution contract the two extreme cases are the consignment contract which allocates all the burden to the manufacturer and the no return contract in which retailers purchase the merchandise outright and assume responsibility for unsold inventory contract choices are shown to vary across countries industries products and types of transactions the article identifies six main factors affecting this choice optimal inventory policy in a stochastic retail demand environment relative advantage in disposing of the unsold inventory optimal risk allocation incentives to invest in promotions and provide services to increase consumer demand information asymmetry and costs associated with the consignment contract per se several testable implications are presented and the choice of contracts in the publishing industry is shown to be consistent with the predictions of the model

a dynamic model for optimal design quality and return policies abstract a clearly explained and generous return policy has been established as a competitive weapon to enhance sales from the firm s point of view a generous return policy will increase sales revenue but will also increase cost due to increased likelihood of return design quality of the product has been used as a competitive weapon for a long time this paper recognizes the relationship between design quality and price of the product and the firm s return policy quality level in the product would influence the amount of return directly when the product quality is higher the customer satisfaction rate will increase and the probability of return will decrease we develop a profit maximization model to jointly obtain optimal policies for the product quality level price and the return policy over time the model presented in this paper is dynamic in nature and considers the decisions as the product moves through the life cycle we obtain a number of managerial guidelines for using marketing and operational strategy variables to obtain the maximum benefit from the market we mention several future research possibilities

price protection in the personal computer industry price protection is a commonly used practice between manufacturers and retailers in the personal computer pc industry motivated by drastic declines of product values during the product life cycle it is a form of rebate given by the manufacturer to the retailer for units unsold at the retailer when the price drops during the product life cycle it is a controversial policy in the pc industry because it is not clear how such a policy benefits the supply chain and its participants we show that price protection is an instrument for channel coordination for products with long manufacturing lead times so the retailer has a single buying opportunity a properly chosen price protection credit coordinates the channel for products with shorter manufacturing lead times so the retailer has two buying opportunities price protection alone cannot guarantee channel coordination when wholesale prices are exoge nous however when the price protection credit is set endogenously together with the wholesale prices channel coordination is restored in the two buying opportunity setting with fixed wholesale prices we show that price protection has two primary impacts 1 shifting sales forward in time and 2 increasing total sales finally we present a simple numerical example that suggests given the current economics of the pc industry that price protection under fixed wholesale prices may benefit the total chain and the retailer but hurt the manufacturer

truncation bias and the ordinal evaiuation of income inequality lorenz dominance analysis is used to examine the effect of top coding on the ordinal evaluation of u s income inequality across time current population survey microdata are adjusted for truncation bias and statistical inference procedures are used to examine biennial changes in unadjusted and adjusted lorenz curves beginning in 1985 the truncation bias has a significant effect on ordinal rankings of income inequality

the bright side of having an enemy conventional wisdom suggests that more intense competition will lower firms profits the authors show that this may not hold in a channel setting with exclusive retailers they find that a manufac

testing the significance of income distribution changes over the 1980s business cycle a cross national comparison using kernel density estimation we describe the distribution of household size adjusted real income and how it changed over the business cycle of the 1980s in the united states and the united kingdom we confirm previous studies that show income inequality increased in the two countries and the middle of the distribution was squashed down using a series of statistical tests however we find that while the mass in both tails of the distribution increased significantly in both countries over the period by far the greatest gains were in the upper tail copyright 1999 john wiley sons ltd

the gini coefficient majority voting and social welfare majority voting and social evaluation functions are the main alternatives proposed in the literature for aggregating individual preferences despite these being very different this paper shows that the ranking of income distributions symmetric under the same transformation by s gini consistent social evaluation functions and majority voting coincide if and only if the inequality index under consideration is the gini coefficient in this case we show that the equally distributed equivalent income is equal to the median of the distribution in addition we find that the gini coefficient is just an affine function of the median mean ratio

returns policy new model introduction and consumer welfare abstract this paper investigates how economic outcomes differ for new model introduction between two extreme contracts outright sales contract and returns policy contract with full credit under the outright sales contract we show that the retailer s incentive to introduce a new model can lead to a reduction of consumer welfare when the retailer is moderately risk averse the primary conclusion from this study is that the returns policy contract resolves this conflict between firms and consumers and that the supply chain introduces the new model only when consumer surplus from the new model is higher than that from the old model

technical note a comparison of bertrand and cournot profits in oligopolies with differentiated products we compare equilibrium profits of bertrand price and cournot quantity competition in oligopolies with an arbitrary number of nonsymmetric firms offering differentiated substitutable products under an affine demand function we provide a precise characterization of the profit relationship in terms of 1 the number of firms 2 their relative quality and cost differences and 3 the competition intensity defined as the maxiumum absolute value of total change in competitors demand over change in own demand due to a unit change in own price we first examine the case where firms have the same demand sensitivity to own price and the same demand sensitivity to competitor prices but different cost and quality parameters for this case we prove that the total profit of the industry under cournot competition is at least as high as the total profit under bertrand competition if the number of firms is less than 28 or if the competition intensity is less than 0 909 or if the differences in quality and cost competitiveness between firms are small we also prove that for each firm the profit achieved under cournot competition is at least as high as the profit achieved under bertrand competition if the number of firms is less than eight or if the competition intensity is less than 0 739 we then provide numerical and analytical results that qualitatively support the same conclusions for general affine demand functions with variable demand sensitivities to prices

research note vertical information sharing in a volatile market when demand is uncertain manufacturers and retailers often have private information on future demand and such information asymmetry impacts strategic interaction in distribution channels in this paper we investigate a channel consisting of a manufacturer and a downstream retailer facing a product market characterized by short product life uncertain demand and price rigidity assuming the firms have asymmetric information about the demand volatility we examine the potential benefits of sharing information and contracts that facilitate such cooperation we conclude that under a wholesale price regime information sharing might not improve channel profits when the retailer underestimates the demand volatility but the manufacturer does not although information sharing is always beneficial under a two part tariff regime it is in general not sufficient to achieve sharing and additional contractual arrangements are necessary the contract types we consider to facilitate sharing are profit sharing and buyback contracts

manufacturer s return policies and retail competition manufacturers returns policies are a common feature in the distribution of many products the obvious rationale for returns policies is insurance practitioners not surprisingly have a different perspective and view returns as a cost of doing business in this paper we study the strategic effect of returns policies on retail competition and highlight its profitability implications for a manufacturer the setting for our research is the distribution of products with uncertain demand limited shelf lives and retail competition our objective is to provide a better understanding of when manufacturers should adopt returns policies the insights are obtained with a model based on the economics of strategy and decision making under uncertainty we show that when retailing is competitive and there is no uncertainty in demand a returns policy subtly induces retailers to compete more intensely the provision of a returns policy reduces retail prices without affecting wholesale prices thereby reducing retailer margins and improving manufacturer profitability the intuition is that with a returns policy cournot like levels of retail stocks cannot be sustained each retailer will order stocks so that it will not be constrained by stocks and so intensifying retail competition when however demand is uncertain and there is a single retailer a returns policy encourages the retailer to over stock and so decreases upstream manufacturer profits while the provision of a returns policy leads to lower retail margins the optimality of returns policy depends on the overall uncertainty and marginal cost a returns policy reduces the dispersion in retail prices between the high and low states of demand and the range of retail prices in the returns case is contained within the range of retail prices for the no returns case in the general setting when there are competing retailers and demand is uncertain there is a trade off for the manufacturer between the benefits more intense retail competition and the costs excessive stocking of a returns policy we find that a manufacturer should accept returns when the marginal production cost is sufficiently low and demand uncertainty is not too great to validate the results of our theory we conduct an empirical test with data from a major u s retailer the tests confirm our prediction that a returns policy intensifies retail competition and reduces retailer margins our theory and empirical test should interest practitioners and researchers in distribution especially those concerned with managing retail competition

optimal reverse channel structure for consumer product returns consumers often return a product to a retailer because they learn after purchase that the product does not match as well with preferences as had been expected this is a costly issue for retailers and manufacturers in fact it is estimated that the u s electronics industry alone spent 13 8 billion dollars in 2007 to restock returned products lawton c 2008 the war on returns wall street journal may 8 d1 the bulk of these returns were nondefective items that simply were not what the consumer wanted to eliminate returns and to recoup the cost of handling returns many retailers are adopting the practice of charging restocking fees to consumers as a penalty for making returns this paper employs an analytical model of a bilateral monopoly to examine the impact of reverse channel structure on the equilibrium return policy and profit more specifically we examine how the return penalty is affected by whether returns are salvaged by the manufacturer or by the retailer interestingly we find that the return penalty may be more severe when returns are salvaged by a channel member who derives greater value from a returned unit also the manufacturer may earn greater profit by accepting returns even if the retailer has a more efficient outlet for salvaging units

equilibrium returns policies in the presence of supplier competition the pioneering pasternack returns policy model analyzed channel coordination with a single supplier catering to a retailer facing stochastic demand for a perishable product with a fixed price and the model showed that giving partial returns of unsold stock to the retailer is the optimal policy for the entire supply chain the result thus begs the question as to why manufacturers of perishable commodities widely accept full returns of unsold stock as the norm we model the environment as one where two capacity constrained manufacturers compete for shelf space with the same retailer and we show that a complete credit returns policy is in fact the only possible equilibrium of the game our results obviate the need for knowing the exact functional form of the demand distribution in order to compute the returns credit as pasternack s results would require from a retailer s standpoint we establish a simple procurement strategy and show that it is optimal the same game with price only contracting has a pure strategy equilibrium when the supplier capacities are below a threshold value and a mixed strategy equilibrium when the supplier capacities cross this threshold but are still so limited that no single supplier can with certainty supply all the quantity demanded

relative deprivation and economic welfare a statistical investigation with gini based welfare indices the average level of relative deprivation is considered as a measure of the economic welfare or standards of living for a society this approach yields welfare indices that are weighted combinations of the mean income and the gini coefficient there has been no systematic international comparison of these gini based welfare indices in this paper they are applied to compare relative deprivation and economic welfare using data from the luxembourg income study the asymptotic distributions of estimators of gini based welfare indices are provided under weighted sampling

the impact of the prechoice process on product returns abstract this article introduces a framework to help researchers understand the mechanisms underlying product returns the framework draws on research in consumer choice consumer memory and attitude stability to predict how the process that consumers go through at a predecisional stage affects their postpurchase behavior the likelihood of product returns is considered contingent on the amount and nature of cognitive responses generated during the choice process in study 1 the authors focus on the impact of the nature of cognitive responses and show that the generation of responses of a different nature while choosing directly affects the likelihood of choice reversal the comparative versus noncomparative nature of thoughts generated influences their diagnosticity and accordingly their impact on product returns when consumers are exposed to disconfirming information in study 2 the authors draw on the inoculation theory to manipulate the number of prechoice thoughts they find that when faced with

sell the plant the impact of contract manufacturing on innovation capacity and profitability in the electronics industry and others original equipment manufacturers oems are selling their production facilities to contract manufacturers cms the cms achieve high capacity utilization through pooling supplying many different oems meanwhile the oems focus on innovation research and development product design and marketing we examine how this change in industry structure affects investment in innovation and capacity and thus profitability in particular innovation is noncontractible so oems will invest less in innovation than is ideal for the industry as a whole hence although contract manufacturing improves capacity utilization it may reduce the profitability of the industry as a whole by weakening the incentives for innovation contract manufacturing is not the only means to achieve capacity pooling alternatively the oems can pool capacity with one another through supply contracts or a joint venture this may result in underinvestment or overinvestment in innovation and capacity but always increases profitability we find that the sale of production facilities to a cm improves profitability for the industry as a whole if and only if oems are subsequently in a strong bargaining position vis a vis the cm if the oems are indeed very strong the gain from pooling capacity via contract manufacturing is maximized in industries with moderate cost of capacity

relative undernutrition in puerto rico under alternative food assistance programmes in the early 1980s puerto rico experienced a conversion from the food stamp program fsp to the nutrition assistance program nap and a severe recession to compare relative undernutrition in puerto rico in 1977 and 1984 stochastic dominance methods and statistical inference procedures are applied to nutrient distributions to separate the effect of the recession from the effect of converting food coupons to cash benefits a multiple regression model of nutrient consumption is also estimated in the dominance comparisons every improvement in nutrition status between 1977 and 1984 is statistically significant at the lowest quintile while no case of worsening undernutrition is significant at the lowest quintile the multiple regression model provides some evidence that the conversion from food coupons to cash might have reduced nutrition status in the lowest quintile but a larger proportion of food assistance was allocated to low income households under the nap than under the fsp no evidence of signi

explaining interstate variation in income inequality this paper investigates interstate variation in income inequality by avoiding inequality indices and focusing directly on the lorenz curve the authors provide a more general explanation of the differences in inequality they find that mean family income the standard deviation of years of schooling per capita educational expenditure and property income are robust predictors of inequality of particular interest is their finding that ceteris paribus higher per capita education expenditures tend to be associated with states that have income inequality which is greater than the u s average copyright 1992 by mit press

agency costs in a supply chain with demand uncertainty and price competition in this paper we model a manufacturer that contracts with two retailers who then choose retail prices and stocking quantities endogenously in a bayesian nash equilibrium if the manufacturer designs a contract that is accepted by both retailers it sets the wholesale price as a compromise between two conflicting roles reducing intrabrand retail price competition and inducing retailers to stock closer to first best levels that is optimum for the supply chain as a whole in equilibrium fill rates are less than first best if on the other hand the manufacturer eliminates retail competition by designing a contract accepted by only one retailer the assignment of consumers to retailers is inefficient in either equilibrium the performance of the supply chain is strictly less than first best however the manufacturer achieves first best retail prices and fill rates if it can subsidize the retailers leftover inventory absent such subsidies the two retailer equilibrium arises when the two retailers compete less intensively in that equilibrium numerical results indicate that the value of subsidizing unsold inventory is increasing in demand uncertainty intensity of retail competition and salvage value of inventory and is decreasing in manufacturing cost and opportunity cost of shelf space

exogenous learning seller induced learning and marketing of durable goods when learning of product characteristics takes some time a firm introducing a new durable faces the trade off between releasing early to an uninformed market and deferring release to a better informed market in a two period monopoly we examine the strategic interaction between exogenous learning el and seller induced learning sil and the firm s product release and pricing strategies the familiar direct effect of strong learning is to facilitate a higher price for informed customers we point out its indirect effect of inducing a higher period 1 price for uninformed customers by lowering their expected utility from learning these two effects underlie three major results first a strong learning intensity does not always imply deferred release surprisingly for medium unit costs the firm releases late early when learning intensity is weak strong second sil facilitates different product release strategies depending on the unit cost level potential sil investment facilitates early release for low or medium unit costs but may facilitate deferred release for high unit costs lastly when customers have heterogeneous prior valuation the high end customers may buy early at a lower price and the low end customers may buy later at a higher price contrary to the usual skim pricing with informed customers this paper was accepted by preyas desai marketing

on sequential commitment in the price dependent newsvendor model abstract we investigate the effect of sequential commitment in the decentralized newsvendor model with price dependent demand sequential commitment allows the self profit maximizing parties to commit to contract parameters e g wholesale price retail price buyback price and order quantity sequentially and alternately and we investigate its effect on the equilibrium profits of the channel and its members sequential commitment introduces more flexibility to contracting in the supply chain and our analysis can provide some insight to channel members who follow a bargaining process to determine the values of contract parameters we show that the introduction of sequential commitment to the price dependent pd newsvendor model with buybacks can significantly improve the manufacturer s and the channel expected profits but it can also decrease the retailer s expected profit finally we demonstrate that with sequential commitment under some conditions the choice of the first mover is endogenized and we identify the unique sequence of commitments by channel members that would arise in equilibrium

statistical inference for the measurement of the incidence of taxes and transfers we establish the asymptotic sampling distribution of general functions of quantile based estimators computed from samples that are not necessarily independent the results provide the statistical framework within which to assess the progressivity of taxes and benefits their horizontal inequity and the change in the inequality of income which they cause by the same token these findings characterise the sampling distribution of a number of popular indices of progressivity horizontal inequity and redistribution they can also be used to assess welfare and inequality changes using panel data and to assess poverty when it depends on estimated population quantiles we illustrate these results using micro data on the incidence of taxes and benefits in canada

sharing the cost of a public good an incentive constrained axiomatic approach we study the problem of provision and cost sharing of a public good in large economies where exclusion complete or partial is possible we search for incentive constrained efficient allocation rules that display fairness properties population monotonicity says that an increase in population should not be detrimental to anyone demand monotonicity states that an increase in the demand for the public good in the sense of a first order stochastic dominance shift in the distribution of preferences should not be detrimental to any agent whose preferences remain unchanged under suitable domain restrictions we give an explicit characterization of all incentive constrained efficient allocation rules we then show that there exists a unique incentive constrained efficient and demand monotonic allocation rule the so called serial rule in the binary public good case the serial rule is also the only incentive constrained efficient and population monotonic rule

calculation and decomposition of income inequality in low and middle income countries a survey data analysis this article estimates income inequality in a sample of four low and middle income lmi countries namely albania nepal tajikistan and tanzania using the household survey data nepal living st

reply to do returns policies intensify retail competition returns policies are common in many sectors of retail distribution padmanabhan and png 1997 showed that with demand uncertainty a returns policy could improve manufacturer profitability under certain conditions wang 2004 showed that returns policies do not change manufacturer profitability when demand is certain and retailing is competitive we show that returns policies do increase manufacturer profitability by attenuating retailer price competition when demand is low and intensifying competition when demand is high importantly this effect holds only in the presence of demand uncertainty further the conditions under which a returns policy raises the manufacturer s profit are weaker when retailing is a duopoly than when retailing is a monopoly this suggests that returns policies serve both to manage competition and mitigate demand uncertainty

measuring long term inequality of opportunity abstract in this paper we introduce a new family of rank dependent measures of inequality and social welfare consistent with the equality of opportunity eop principle the proposed framework can be used to measure long term as well as short term eop depending on whether we let permanent income or snapshots of income form the basis of the analysis furthermore it allows for both an ex ante and an ex post approach to eop there is long term ex post inequality of opportunity if individuals who exert the same effort have different permanent incomes in comparison the ex ante approach focuses on differences in the expected permanent income between groups of individuals with identical circumstances to demonstrate the empirical relevance of a long run perspective on eop we exploit a unique panel data from norway on individuals incomes over their working life span this allows us to examine how well analysis of opportunity inequality based on snapshots of income approximate the results based on permanent income

comment managing channel profits comment in a recent paper in this journal jeuland and shugan jeuland a s shugan 1983 managing channel profits marketing sci 2 summer 239 272 proposed a quantity discount schedule as a way of coordinating a channel as they put it on p 253 of their paper a quantity discount schedule which would fix the retailer s and hence the manufacturer s profits to some fixed linear function of total channel profits would lead the channel to maximize profits the purpose of this note is to show that a quantity discount schedule is not necessary for channel coordination

buyback contracts with price dependent demands effects of demand uncertainty chapter 2 examines buyback contracts in a supplier retailer supply chain where the retailer faces a price dependent downward sloping demand curve subject to uncertainty compared with classical research a fundamental difference of this research lies in its analytical examination of the effects of demand uncertainty on the applicability of buyback contracts to this end the research seeks to characterize the buyback contract model in terms of only demand uncertainty level with such a new research perspective some new and interesting findings are obtained for such issues as how demand uncertainty level affects the applicability of buyback practice and how to apply this practice to improve supply chain members own interests or the supply chain system s efficiency the research in this chapter demonstrates that the uncertainty level inherent in market demand can be a critical factor influencing the applicability of supply chain contracts as well as the contract s administrative cost cachon 2003 and the uncertainty type marvel and peck 1995

income redistribution going awry the reversal power of the concern for relative deprivation abstract we demonstrate that a rank preserving transfer from a richer individual to a poorer individual can exacerbate income inequality when inequality is measured by the gini coefficient this happens when individuals preferences depend negatively not only on work time effort but also on low relative income it is rigorously shown that the set of preference profiles that gives rise to this perverse effect of a transfer on inequality is a non empty open subset of all preference profiles a robust example illustrates this result

coordinated decisions for substitutable products in a common retailer supply chain abstract this paper studies coordination mechanisms in a supply chain which consists of two suppliers with capacity uncertainties selling differential yet substitutable products through a common retailer who faces price sensitive random demand of these two products we develop in a noncompetitive setting three coordination models revenue sharing return policy and combination of revenue sharing and return policy and contrast them with a basic and uncoordinated model we are able to establish the ordinal relationship among the retailer s ordering and pricing decisions and analytically compare the performances between certain models when two suppliers are identical we find that the retailer s ordering and pricing decisions in the model with return policy in the case of identical suppliers are independent of demand or supply uncertainty our numerical results reveal that the performances of coordination models in the case of nonidentical suppliers resemble those in the case of identical suppliers we find that the retailer will place a larger order quantity in models where her average cost per unit sold is smaller we also find that product substitutability and uncertainties have different effects on chain performances

the impacts of the full returns policy on a supply chain with information asymmetry abstract in contrast to the existing return policies literature assuming that information is symmetrical between the manufacturer and the retailer we study the full returns policy s impact on supply chains with information asymmetry we first study the case that the base level of the demand follows a discrete distribution with two states we find that the retailer benefits from the full returns policy in all circumstances while the manufacturer and the supply chain are better off under some conditions we then consider the situation in which the base level of the demand is a type of ar 1 process

note the role of returns policies in pricing and inventory decisions for catalogue goods manufacturers often use returns policies to encourage retailers to stock and price items more aggressively we focus on the effect that such policies have on both a retailer s and a manufacturer s profits when the retailer must commit prior to the selling season to both a stocking quantity and a price at which to sell an item such a commitment is often necessary for retailers who sell primarily through catalogues

demand forecast sharing in a dual channel supply chain abstract we assess the benefits of sharing demand forecast information in a manufacturer retailer supply chain consisting of a traditional retail channel and a direct channel the demand is a linear function of price with a gaussian primary demand i e zero price market potential both the manufacturer and the retailer set their price based on their forecast of the primary demand in this setting we investigate the value of sharing demand forecasts we analyze the make to order scenario in which prices are set before and production takes place after the primary demand is known and the make to stock scenario in which production takes place and prices are set before the primary demand is known we also compare the supply chain performance with and without the direct channel under some assumptions production cost is zero and each demand function has the same slope of price we find that the direct channel has a negative impact on the retailer s performance and under some conditions the manufacturer and the whole supply chain are better off our research extends and complements prior research that has investigated only the inventory and replenishment related benefits of information sharing

research note the effects of costs and competition on slotting allowances we consider the optimal two part tariff contract between a manufacturer and a retailer we show that retail competition in the presence of either fixed costs or bargaining power may lead to slotting allowances in an optimal contract even with a monopoly manufacturer and no information asymmetry on the other hand slotting allowances do not arise with a monopoly retailer and no information asymmetry whether the manufacturer is a monopoly or not we also show that more intense retail competition higher retail bargaining power larger retailer fixed costs lower marginal costs of retailing as well as larger relative retailer size whether coming from a location or operating advantage have a positive impact on the incidence and the magnitude of slotting allowances the opposing effects of the fixed and marginal operating costs on slotting allowances as well as the impact of competition and bargaining power on profits underscore the importance of careful definitions of these variables in empirical research

using return policies to elicit retailer information we show that a manufacturer may prefer to offer a return policy when dealing with a retailer who holds advance knowledge about market conditions roughly stated the manufacturer offers a liberal return allowance in lieu of a lower price to satisfy a retailer facing unfavorable market conditions a retailer facing favorable conditions finds this tradeoff unattractive because he is likely to sell the merchandise anyway and thus not make as much use of the generous return terms as a consequence a retailer is less inclined to misstate market conditions by serving as an additional control instrument a returns policy reduces the manufacturer s need to ration cut production

analysis of supply chains with quantity based fixed incentives abstract this paper examines the use of quantity based fixed incentives to coordinate inventory decisions in a decentralized supply chain we consider a two stage supply chain of autonomous supplier and distributor and prove that the optimal ordering policy for the newsvendor distributor under fixed incentives is an s s type policy we further show that external and internal quantity based incentives can restore channel coordination in single period and channel members can benefit through arbitrary splitting of the resulting additional chain profit the single period results are extended to multiple periods and the impact of fixed incentives on the distributor s optimal stocking policy and channel efficiency are examined under three different multi period supplier strategies numerical examples are used to compare the multi period strategies and to provide additional managerial insights the results show that contrary to common belief incentive plans developed and maintained based only on current inventory data perform poorly in long term and that such incentive plans must be periodically updated to enhance their efficiency furthermore we show that high level of incentives designed to push too much inventory downstream of the supply chain can actually reduce the chain s efficiency

price versus production postponement capacity and competition this article presents a comparative analysis of possible postponement strategies in a two stage decision model where firms make three decisions capacity investment production inventory quantity and price typically investments are made while the demand curve is uncertain the strategies differ in the timing of the operational decisions relative to the realization of uncertainty we show how competition uncertainty and the timing of operational decisions influence the strategic investment decision of the firm and its value in contrast to production postponement price postponement makes the investment and production inventory decisions relatively insensitive to uncertainty this suggests that managers can make optimal capacity decisions by deterministic reasoning if they have some price flexibility under price postponement additional postponement of production has relatively small incremental value therefore it may be worthwhile to consider flexible ex post pricing before production postponement reengineering while more postponement increases firm value it is counterintuitive that this also makes the optimal capacity decision more sensitive to uncertainty we highlight the different impact of more timely information which leads to higher investment and inventories and of reduced demand uncertainty which decreases investment and inventories our analysis suggests appropriateness conditions for simple make to stock and make to order strategies we also present technical sufficiency and uniqueness conditions under price postponement these results extend to oligopolistic and perfect competition for which pure equilibria are derived interestingly the relative value of operational postponement techniques seems to increase as the industry becomes more competitive

supply chain coordination perspectives empirical studies and research directions supply chains sc are generally complex and are characterized by numerous activities spread over multiple functions and organizations which pose interesting challenges for effective sc coordination to meet these challenges sc members must work towards a unified system and coordinate with each other a systematic literature review is presented in this paper to throw light on the importance of sc coordination the objectives of this paper are to report and review various perspectives on sc coordination issues understand and appreciate various mechanisms available for coordination and identify the gaps existing in the literature a framework is suggested indicating scope for further research

international comparisons of income inequality tests for lorenz dominance across nine countries this paper examines income inequality across nine countries using the luxembourg income study data set new statistical tests and comparability of data provide an exceptionally clear picture of relative income inequality only 4 comparisons out of a possible 108 cannot be ranked in most cases differences in the definition of the recipient unit make little difference in the rankings irrespective of recipient units sweden norway and germany come out at the top of the ordinal lorenz ranking with australia canada and the united kingdom in the middle and the united states and switzerland at the bottom copyright 1991 by the london school of economics and political science

channel coordination using product returns for a supply chain with stochastic salvage capacity abstract we examine returns policy in a newsboy framework unlike the prior literature however we assume that both supplier and retailer have limited and stochastic salvage capacities we first analyze the case of integrated supply chain in which the agents decisions are fully coordinated for the joint profits the result prescribes a partial returns policy in which the retailer returns a part of the leftovers to the supplier and liquidates the remainder through its clearance sale in a decentralized system the supplier should motivate the retailer to duplicate the outcome of the integrated system in choosing order and returns quantities we propose three coordination contracts of which each uses two benefit transfer schemes as an incentive to the retailer instead of using a single benefit scheme as in the prior literature all three effectively coordinate the supply chain the supplier as a stakelberg leader chooses the most profitable one since each contract yields the different shares of the agents profits

the value of flexibility in make to order systems the effect of demand correlation we consider a manufacturer of mass customized modular products who orders components under demand uncertainty and sets prices produces to order and trades excess components in a secondary market after this uncertainty is resolved the sequence of events reflects in a parsimonious fashion the considerable reduction in demand uncertainty between the procurement stage and the selling season typical of industries with long supply lead times and short product life cycles we prove that in contrast to conventional wisdom the value of production flexibility and expected profit increase with demand correlation if and only if commonality between the corresponding products does not exceed a threshold we also prove that the value of flexibility and expected profit may each increase or decrease with demand variability depending on demand correlations and component commonalities across the entire product line finally we prove that when demand shocks are independent the optimal product prices are positively correlated if and only if the degree of commonality between the corresponding products exceeds a threshold

do returns policies intensify retail competition the paper manufacturer s returns policies and retail competition by padmanabhan and png 1997 argues that returns policies intensify retail competition and therefore raise the manufacturer s profits they reach that result through a problematic method to solve the game particularly in the game where the manufacturer accepts returns they unreasonably assume the retailers would never face stock constraints thus changing the retail competition from a cournot like competition to a bertrand one actually in a game where retailers first order stocks and then compete by choosing prices even if a manufacturer offers full return policies the retailers can still use insufficient stocks as quantities precommitment in order to uphold retail prices hence the retailers still face stock constraints at the final stage of the game the nature of the game is essentially unaffected by returns policies when demand is certain this note shows that returns policies do not intensify retail competition in the model proposed by padmanabhan and png 1997

manufacturer s revenue sharing contract and retail competition this paper investigates a revenue sharing contract for coordinating a supply chain comprising one manufacturer and two competing retailers the manufacturer as a stackelberg leader offers a revenue sharing contract to two competing retailers who face stochastic demand before the selling season under the offered contract terms the competing retailers are to determine the quantities to be ordered from the manufacturer prior to the season and the retail price at which to sell the items during the season the process of pricing and ordering is expected to result in an equilibrium as in the bayesian nash game on the basis of anticipated responses and actions of the retailers the manufacturer designs the revenue sharing contract adopting the classic newsvendor problem model framework and using numerical methods the study finds that the provision of revenue sharing in the contract can obtain better performance than a price only contract however the benefits earned under the revenue sharing contract by different supply chain partners differ because of the impact of demand variability and price sensitivity factors the paper also analyses the impact of demand variability on decisions about optimal retail price order quantity and profit sharing between the manufacturer and the retailers lastly it investigates how the competition between retailers factor influences the decision making of supply chain members in response to uncertain demand and profit variability