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The Length of Product Line in Distribution Channels


Yunchuan Liu


University of Illinois at Urbana-Champaign

Tony Haitao Cui


University of Minnesota - Twin Cities
September 28, 2009

Marketing Science, Forthcoming

Abstract:     
This paper studies a manufacturer's optimal decisions on extending its product line when the manufacturer sells through either a centralized channel or a decentralized channel. We show that a manufacturer may provide a longer product line for consumers in a decentralized channel than in a centralized channel if the market is fully covered. In addition, a manufacturer's decisions on the length of its product line may not always be optimal from a social welfare perspective in either a centralized or a decentralized channel. Under certain conditions, a decentralized channel can provide the product line length which is socially optimal whereas a centralized channel cannot.

Number of Pages in PDF File: 57

Keywords: Product Line, Distribution Channel, Consumer Heterogeneity, Game Theory

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Date posted: September 29, 2009 ; Last revised: July 7, 2010

Suggested Citation

Liu, Yunchuan and Cui, Tony Haitao, The Length of Product Line in Distribution Channels (September 28, 2009). Marketing Science, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1479600

Contact Information

Yunchuan Liu (Contact Author)
University of Illinois at Urbana-Champaign ( email )
601 E John St
Champaign, IL 61820
United States
(217)244-2749 (Phone)
(217)244-7969 (Fax)
Tony Haitao Cui
University of Minnesota - Twin Cities ( email )
321 19th Ave S
Suite 3-150
Minneapolis, MN 55455
United States
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