Population internet penetration rate and channel supply chain players' performances

Ruiliang Yan, John Wang, Sanjoy Ghose

Research output: Contribution to journalArticleResearchpeer-review

1 Citation (Scopus)

Abstract

With the rapid development of the internet, the population internet penetration rate plays a strategic importance in the dual-channel supply chain. In this research, we use a game-theoretic approach to examine the effect of the population internet penetration rate on the performances of the manufacturer and traditional retailer under the Stackelberg and Bertrand competitive models. Our results suggest that an increase in the population internet penetration rate always has a negative impact on the manufacturer and traditional retailer's profits. Furthermore, when the product is more suitable for the online market, the traditional retailer will be hurt more by the population internet penetration rate. For the manufacturer, although a larger product web fit can increase profits, the population internet penetration rate has a stronger impact on profitability, thus decreasing profits even as the product web fit increases. Our results also suggest that both the manufacturer and the retailer can adopt either of the Stackelberg and Bertrand competitive market structures in the dual-channel supply chain since their profits are unaffected by the two models. The managerial implications of our results are discussed and the probable paths of future research are identified.

Original languageEnglish
Pages (from-to)329-347
Number of pages19
JournalInternational Journal of Internet Marketing and Advertising
Volume5
Issue number4
DOIs
StatePublished - 27 Aug 2009

Fingerprint

World Wide Web
Penetration
Supply chain
Retailers
Profit
Dual-channel
Stackelberg
Profitability
Online markets
Competitive model
Market structure
Competitive market

Keywords

  • Channel competition
  • Game theory
  • Marketing strategies

Cite this

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Population internet penetration rate and channel supply chain players' performances. / Yan, Ruiliang; Wang, John; Ghose, Sanjoy.

In: International Journal of Internet Marketing and Advertising, Vol. 5, No. 4, 27.08.2009, p. 329-347.

Research output: Contribution to journalArticleResearchpeer-review

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