The Length of Product Line in Distribution Channels

Marketing Science, Forthcoming

57 Pages Posted: 29 Sep 2009 Last revised: 7 Jul 2010

See all articles by Yunchuan Liu

Yunchuan Liu

University of Illinois at Urbana-Champaign

Tony Haitao Cui

University of Minnesota - Twin Cities

Date Written: September 28, 2009

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.

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

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: https://ssrn.com/abstract=1479600

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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