Strategic Interactions between Manufacturer´s Direct Selling and Retailer´s Store Brand Introduction Decisions in Dual-Channel Supply Chain

In this work, we explore a supply chain where the supplier considers whether to open a direct selling channel complementing with the retailing channel, and as a response, the retailer considers whether to introduce his store brand. We model this relationship by a four-stage dynamic game. We show that there exists an equilibrium solution for this game where the direct selling and store brand introduction are the dominant strategies for the supplier and the retailer, respectively. Moreover, we discuss the effects of the product and channel substitutability on supplier and retailerpsilas profits. We show that, the higher the product substitutability, the higher the retailerpsilas profit will be, and the higher the channel substitutability, the higher the supplierpsilas profit will be.