Carbon differentials and dual channels: The choice and impact of optimal strategies for manufacturer market encroachment

Abstract This study discusses the cannibalization strategy of an outside manufacturer. A game‐theoretic model is developed in which manufacturers sell low‐quality products through retailers. The external manufacturer chooses between the retailer channel and the direct sales channel when considering carbon differences. The results show that carbon differentials and direct marketing costs play a key role in the choice of cannibalization strategy. Cannibalization by external manufacturers through retailers is not necessarily harmful to existing manufacturers. An increase in the degree of carbon differentiation leads to a decrease in wholesale and retail prices, while direct pricing by external manufacturers increases.

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Publication Details

Journal
Managerial and Decision Economics
Published
2024-09-05
DOI
https://doi.org/10.1002/mde.4378
Primary Topic
Supply Chain and Inventory Management
Type
article
Field-Weighted Citation Impact
0.00

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article

Carbon differentials and dual channels: The choice and impact of optimal strategies for manufacturer market encroachment

Yunpei Cheng, Yan Tang
Managerial and Decision Economics
Supply Chain and Inventory Management
article

Carbon differentials and dual channels: The choice and impact of optimal strategies for manufacturer market encroachment

Yunpei Cheng, Yan Tang
article en

Abstract

Abstract This study discusses the cannibalization strategy of an outside manufacturer. A game‐theoretic model is developed in which manufacturers sell low‐quality products through retailers. The external manufacturer chooses between the retailer channel and the direct sales channel when considering carbon differences. The results show that carbon differentials and direct marketing costs play a key role in the choice of cannibalization strategy. Cannibalization by external manufacturers through retailers is not necessarily harmful to existing manufacturers. An increase in the degree of carbon differentiation leads to a decrease in wholesale and retail prices, while direct pricing by external manufacturers increases.

Managerial and Decision EconomicsVol. 46(1)
Tianjin University of Technology (CN)
National Social Science Fund of China
Openalex Percentile: Top 78%
Supply Chain and Inventory Management
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