Equilibrium Strategies of Manufacturer’s Encroachment under a Capital-Constraint Retailer - Open Journal of Business and Management

OJBM > Vol.8 No.6, November 2020

Equilibrium Strategies of Manufacturer’s Encroachment under a Capital-Constraint Retailer ()

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DOI: 10.4236/ojbm.2020.86163 365 Downloads 990 Views

Author(s)

Zhen Wu, Gengjun Gao

Affiliation(s)

Institute of Logistics Science and Engineering Research, Shanghai Maritime University, Shanghai, China.

ABSTRACT

In this paper, we investigate a two-echelon supply chain consisting of a manufacturer and a capital-constraint retailer. Based on this supply chain, the manufacturer, as the leader in the Stackelberg game, decides whether to channel encroachment, and the retailer, as the follower, decides which financing mode to adopt. Based on Stackelberg game, we established the corresponding game models to obtain the equilibriums. The research results show that the manufacturer’s channel encroachment is related to the channel establishing cost. When the channel encroachment cost is small, the manufacturer opens direct channel. Conversely, manufacturers do not build direct channels. After the encroachment, the manufacturer chose to sell products through dual channels. The equilibrium of single channel financing is internal financing. In the case of dual channels, the retailer’s financing decision is related to the equity financing ratio, which is relatively small, and external financing is financing equilibrium.

KEYWORDS

Manufacturer Encroachment, Financing Strategies, Stackelberg Game, Supply Chain Management

Share and Cite:

Wu, Z. and Gao, G. (2020) Equilibrium Strategies of Manufacturer’s Encroachment under a Capital-Constraint Retailer. Open Journal of Business and Management, 8, 2633-2648. doi: 10.4236/ojbm.2020.86163.

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