Research On Dual-channel Supply Chain Coordination Considering Consumers' Free Riding Behavior

With the acceleration of product replacement and the increasingly fierce market competition,the market demand is becoming more and more uncertain,which brings uncertain risks to the company's earnings.In recent years,with the deepening of e-commerce applications,more and more manufacturers have established dual channel distribution through the creation of online channels.The dual-channel distribution enriches the consumer's choice of products and provides convenience for consumers' free riders,but it also makes the channel conflicts between upstream manufacturers and downstream retailers increasingly prominent.How to effectively alleviate the negative impact of consumers' free-rider behavior on the supply chain is an important issue facing supply chain management.For this reason,this article examines the decision-making and supply chain coordination of manufacturers and retailers under the leadership of manufacturers and retailers in a dual-channel supply chain consisting of a risk-neutral manufacturer and a risk-averse retailer.In the manufacturer-dominated supply chain,based on retailer risk aversion and consumer free-rider behavior,the decisions of manufacturers and retailers are studied and the supply chain coordination is carried out under the centralized decision and decentralized decision-making firstly.The study finds that retailer risk aversion under centralized decision-making will reduce the service level of the supply chain system and the sales price of products in each channel.Under decentralized decision-making,retailer risk aversion and consumer free-riding will inhibit the retailer's service level,reduce sales price and expected utility.When the retailer's compensation cost to the manufacturer meets certain conditions,the supply chain contract can not only achieve the Pareto improvement of manufacturers and retailers' expected profit,but also effectively improve the retailer's service level.Numerical experiments verify the above conclusions.At the same time,it is also found that under the decentralized decision-making,consumers' free-riding will have adverse effects on manufacturers and the supply chain,and retailers' attitudes towards the market are evaded.The overall expected profit of the supply chain will be damaged and manufacturers will benefit.The decisions of manufacturers and retailers were studied and the supply chain coordination was carried out next in the retailer-dominated supply chain,under the centralized decision and decentralized decision-making.The research shows that under the retailer-led situation,the retailer's risk avoidance characteristics and consumer's free riders will still inhibit the retailer's service level,reduce the sales price,marginal profit and the expected utility.For the designed supply chain contract,when the retailer's compensation cost to the manufacturer meets certain conditions,not only can the Pareto improvement of the profits of manufacturers and retailers be achieved,but also the retailer's service level can be effectively improved.The decision-making differences between manufacturer-led and retailer-dominated supply chains are compared finally.The study found that when the potential market demand for a product is high,compared with a manufacturer-dominated supply chain,retailers occupy a dominant position in the supply chain and are more favorable to the supply chain as a whole.At this time,the retailer expects a higher utility,while manufacturers expect lower profits.Manufacturers and retailers are willing to accept retailers to dominate the supply chain when retailers compensate manufacturers for certain conditions.Compared with the manufacturer's leading supply chain,the retailer's leading supply chain,the retailer service level,profit margin,network channel product sales price are higher.