Abstract

http://ssrn.com/abstract=1419164
 
 

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Fairness and Channel Coordination


Tony Haitao Cui


University of Minnesota - Twin Cities

Jagmohan S. Raju


University of Pennsylvania - Marketing Department

Z. John Zhang


University of Pennsylvania - The Wharton School - Department of Marketing

August 2007

Management Science, Vol. 53, No. 8, pp. 1303-1314, 2007

Abstract:     
In this paper, we incorporate the concept of fairness in a conventional dyadic channel to investigate how fairness may affect channel coordination. We show that when channel members are concerned about fairness, the manufacturer can use a simple wholesale price above its marginal cost to coordinate this channel both in terms of achieving the maximum channel profit and in terms of attaining the maximum channel utility. Thus, channel coordination may not require an elaborate pricing contract. A constant wholesale price will do.

Number of Pages in PDF File: 28

Keywords: Distribution Channels, Fairness, Channel Coordination, Behavioral Economics

JEL Classification: D03, D74, D86, L11, L43, M31, M38

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Date posted: June 15, 2009  

Suggested Citation

Cui, Tony Haitao and Raju, Jagmohan S. and Zhang, Z. John, Fairness and Channel Coordination (August 2007). Management Science, Vol. 53, No. 8, pp. 1303-1314, 2007. Available at SSRN: http://ssrn.com/abstract=1419164

Contact Information

Tony Haitao Cui (Contact Author)
University of Minnesota - Twin Cities ( email )
321 19th Ave S
Suite 3-150
Minneapolis, MN 55455
United States
Jagmohan S. Raju
University of Pennsylvania - Marketing Department ( email )
700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States
215-898-1114 (Phone)
215-898-2534 (Fax)

Z. John Zhang
University of Pennsylvania - The Wharton School - Department of Marketing ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
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