Price-Matching for Sales Service Coordination with Free-Riding between Retailers

This paper studies sales service coordination for a dual-channel supply chain, where an online retailer offers a lower price and free-rides a brick-and-mortar retailer´s sales service. The free riding action reduces brick-and-mortar retailer´s desired service level, and hurts the manufacturer´s profit and the overall supply chain performance. To achieve sales service coordination, we designed a contract with price match and selective compensation rebate.