Extended warranty in monopoly manufacturer channel

Today´s product market becomes more competitive. More and more products providers including the manufacturer and retailer pay more attention to the service market such as the extended warranty. We analyze and discuss the monopoly manufacturer channel under the condition that the manufacturer offers the extended warranty or the retailer does by using the game theory. Our analysis reveals that: for the manufacturer, scenario MRR-R outperforms scenario MRR-M, while for the retailers and the whole system, it depends on the parameters including the channel substitutability and the base demand.