# Manufacturer Channel Encroachment and Evolution in E-Platform Supply Chain: An Agent-Based Model
## 4 Simulation and Results
### The Effect of Channel Maintenance Cost  
The channel maintenance price is the cost that the manufacturer has to bear each cycle to keep the direct sales channel running properly, i.e., the channel encroachment cost. In Scenario D, we experiment with increasing the channel maintenance cost from 200 to 300. This means increased costs for dual-channel manufacturers.  
**Observation 3**.: _Channel maintenance prices have an impact on the number of dual channel manufacturers (NDM), product sales, and consumer utility._  
Figure 10: (**a**) Sales quantity in A and C; (**b**) consumer utility in A and C. (\(t=100\)).  
Figure 9: Prices in A and C of: (**a**) high-quality product in retail channel; (**b**) low-quality product in retail channel; (**c**) high-quality product in direct sales channel; (**d**) low-quality product in direct sales channel. (\(t=100\)).  
Looking at Figure 11, we find that the maximum number of dual channel manufacturers after 100 periods is 5 in the 100 experiments of scenario D, while the benchmark scenario has 6 and 1 dual channel manufacturer in 5 and 1 of the 100 experiments, respectively. This suggests that rising costs have inhibited channel encroachment by manufacturers. It is not difficult to explain that the cost of channel maintenance, as a cost of channel encroachment, is one of the most important factors influencing manufacturers' channel decisions. When direct channel maintenance costs increase, manufacturing encroachment costs more, and over time the manufacturer's propensity for channel encroachment becomes lower in the face of the intense channel competition that evolves.  
By analysing the price data for Scenarios A and D, we find that channel maintenance costs do not have a significant impact on product prices, as shown in Figure 12. According to Table 6, the results of the statistical test showed no significant difference in the four prices between the two scenes. The manufacturers do not raise prices in the direct channel to offset the encroachment costs, nor do they raise prices in the retail channel to compensate for the loss in the direct channel. This suggests that manufacturers should maintain normal operational decisions when the cost of encroachment is unavoidable, and that they will directly choose to abandon encroachment when it is no longer profitable.  
The reduced willingness of manufacturers to channel encroach mitigates the intensity of channel competition, resulting in consumers not being able to derive higher utility and consumption experience from channel competition. Therefore, as shown in Figure 13, product sales and consumer utility are reduced slightly under Scenario D.  
\begin{table}
\begin{tabular}{c c c} \hline \hline
**Null Hypothesis (\(H_{0}\))** & \(p\)**-Value** & **Result** \\ \hline \(\mu_{A}(RP_{H})=\mu_{D}(RP_{H})\) & 0.959 & Cannot reject \\ \(\mu_{A}(RP_{L})=\mu_{D}(RP_{L})\) & 0.537 & Cannot reject \\ \(\mu_{A}(DP_{H})=\mu_{D}(DP_{H})\) & 0.937 & Cannot reject \\ \(\mu_{A}(DP_{L})=\mu_{D}(DP_{L})\) & 0.086 & Cannot reject \\ \hline \hline \end{tabular}
\end{table}
Table 6: Statistical test results for Scenario A and Scenario D prices.  
Figure 11: NDM in A and D (\(t=100\)).