TITLE:
Equilibrium Strategies of Manufacturer’s Encroachment under a Capital-Constraint Retailer
AUTHORS:
Zhen Wu, Gengjun Gao
KEYWORDS:
Manufacturer Encroachment, Financing Strategies, Stackelberg Game, Supply Chain Management
JOURNAL NAME:
Open Journal of Business and Management,
Vol.8 No.6,
November
20,
2020
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.