860. Retailers’ Parallel Importation and Service Provision in a Supply Chain: Incentives and Impacts
Invited abstract in session WD-47: Game Theory in Retail II, stream Retail Operations.
Wednesday, 14:30-16:00Room: Parkinson B08
Authors (first author is the speaker)
| 1. | Xiang Zhu
|
| Operations, University of Groningen |
Abstract
We employ a game-theoretic approach to examine intricate relationships between retailers’ strategic decisions of parallel importation and service provision. Considering a scenario where a manufacturer distributes products through a retailer in a low willingness-to-pay (WTP) market (L) and directly in a high WTP market (H), we analyze consequences of the
retailer’s choice to provide services in market L while engaging in parallel importation from market L to H. Our findings reveal that the pursuit of parallel importation causes a decline in the retailer’s service level, and a growth in consumers’ WTP in market H corresponds to a
diminished service level in market L. Additionally, the retailer’s provision of services weakens its incentive for parallel importation but intensifies conflicts with the manufacturer. Although the combined strategy enhances overall consumer surplus, consumers in market L consistently suffer from parallel importation. Moreover, even though the markets are
interconnected owing to parallel importation, the retailer’s service provision does not visibly affect the potential service level of the manufacturer in market H.
Keywords
- Supply Chain Management
- Game Theory
- Marketing
Status: accepted
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