Pricing and service decisions of complementary products in a dual-channel supply chain

- The paper considers the pricing and service problem of complementary products in a dual-channel supply chain.
- The paper considers whether the two channel pricing is different or not, i.e. consistent pricing and inconsistent pricing.
- The optimal pricing decisions and maximal profits are presented in explicit form.
- Some valuable managerial insights which are different from the previous literature can be obtained.

This paper investigates the pricing and service decisions of complementary products in a dual-channel supply chain which consists of two manufacturers and one common retailer. One of two manufacturers distributes products through both the direct online channel and the traditional retail channel. Considering the efficacy of different supply chain structures and two types of channel pricing forms, four game models are established. By using the backwards induction and game theory, the corresponding analytical equilibrium solutions are obtained. Finally, numerical examples are presented to compare the effectiveness of optimal results, which gained from the model above and perform a sensitivity analysis of some key parameters, by which obtain some valuable managerial insights.