Study On Dual-Channel Tacit Collusion Based On Product Experience And Supply Chain Structure

As the development of internet and technology, e-channel has been a popular marketing channel because of its low cost, convenient and directness. That makes dual –channel becomes a main marketing structure. But when online channel and offline channel sell the same product to consumer, there are always a fierce price competition and it becomes irrational so that none of dual-channel supply chain will have long-term profit. Under this circumstances, it is very necessary to study on rational competition between dual-channel during their long-term coexistence.This paper summarize the key factors that have effect on dual-channel long-term competition as product experience and supply chain structure of each channel. Product experience means needs of exhibition channel, supply chain structure means the bargain power between supplier and retailer of each channel supply chain, which also represent degree of centralization of each supply chain. Based on those two factors, this paper use tacit collusion theory to discuss dual-channel long-term win-win situation. First according to tacit collusion theory, we define dual-channel collusion as the condition that both online retailer and offline retailer set their channel price by common profit. Second, build game modal based on supply chain structure factor and product experience index demand formulation. Third, calculate three competition condition which are Nash competition, tacit collusion competition and deviation from tacit collusion. After analyze the three conditions based on supply chain structure and product experience index, the paper build a modal from repeated game theory to discuss the requirement of dual-channel stay tacit collusion in a long-term. The main findings are as below.Dual-channel price competition is related to product experience and supply chain structure. Under Nash condition, dual-channel competition become more fierce as product experience lower and supply chain becomes more centralized. Tacit collusion of dual-channel can soften the irrational price competition. Although each side has the tempt to deviate from tacit collusion since it is a spontaneity action, the dual-channel can sustain tacit collusion in a long-term. Each channel’s discount factor has a threshold value. Each channel is more likely to choose tacit collusion as product experience becomes lower and their own supply chain structure becomes more centralized. For each channel, profit of deviation from long-term tacit become lower as product experience become lower and chain structure becomes more centralized. Finally, dual-channel can only sustain tacit collusion under a certain product experience section which is influenced by supply chain structure factor and it is easier for dual-channel tacit collusion if the offline supply chain is decentralized.