Impact of Retailer’s Vertical and Horizontal Fairness Concerns on Manufacturer’s Online Channel Mode

Abstract

This paper investigates a dual-channel supply chain consisting of a manufacturer and a retailer, where the retailer exhibits vertical and horizontal fairness concerns. The manufacturer or the retailer direct selling and e-commerce platform agency selling modes are employed to characterize the impact of retailer’s fairness concerns on the online channel mode strategy. Results show that the retailer’s fairness concerns only affect the wholesale price and online channel mode strategy. Without the retailer’s fairness concerns, the manufacturer direct selling mode is the best strategy for the manufacturer, which harms the retailer’s utility. With the retailer’s fairness concerns, the manufacturer may choose the manufacturer direct selling or e-commerce platform agency selling mode. When the fairness concern parameters meet a certain range, the e-commerce platform agency selling mode strategy is better for the supply chain members, which can solve the interest conflict between supply chain members. These research findings help dual-channel supply chain members understand how to choose the channel structure strategy to balance the supply chain members’ interests by considering fairness concerns.

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