Studies on Competitive Parallel Distribution Channels with Move Sequence under Stochastic Demand

In this paper, we explore the effects of the move sequence on the equilibrium outcomes in the PDC structure subject to the stochastic demand with risk aversion retailers and risk neutral manufacturer. Under some assumptions, we have shown that both PDC and its channel members have the second-mover advantages in this scenario. We address that not only the system competitive degrees but also the move sequences have great impacts on the players´ decision makings and the system performance. On the other hand, the downstream risk aversion and the demand fluctuation will cause the profit to be transferred from downstream retailers to upstream manufacturers. Moreover, we compare the outcomes between two scenarios, one is under deterministic demand and the other is under stochastic demand. It shows that consumers will benefit from the scenario under deterministic demand when the situation is under perfect product substitution and severe retail competition. Finally, we discuss the results and proffer some managerial insights.