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Direct Marketing in Oligopoly

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  • Tomomichi Mizuno

Abstract

We consider a game in which symmetric manufacturers decide whether to set up sites (e.g., web sites) where consumers can buy their products directly. Following this decision, the manufacturers choose quantities to sell to the retailers, and then the manufacturers with direct‐sales sites and retailers choose quantities to sell to the consumers. We show that since an increase in the number of retailers may drive the direct‐selling manufacturers from the retail market, it may raise the retailers’ profit and reduce social welfare. Finally, we discuss two cases: an oligopolistic wholesale market and a market with price competition and differentiated products.

Suggested Citation

  • Tomomichi Mizuno, 2012. "Direct Marketing in Oligopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(2), pages 373-397, June.
    • Handle: RePEc:bla:jemstr:v:21:y:2012:i:2:p:373-397
    DOI: j.1530-9134.2012.00337.x
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    References listed on IDEAS

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    1. Michael A. Salinger, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(2), pages 345-356.
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    3. Neil Wrigley, 2001. "The consolidation wave in U.S. food retailing: A European perspective," Agribusiness, John Wiley & Sons, Ltd., vol. 17(4), pages 489-513.
    4. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
    5. Buehler Stefan & Schmutzler Armin, 2005. "Asymmetric Vertical Integration," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 5(1), pages 1-27, January.
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    Cited by:

    1. Li, Tingting & Xie, Jinxing & Zhao, Xiaobo, 2015. "Supplier encroachment in competitive supply chains," International Journal of Production Economics, Elsevier, vol. 165(C), pages 120-131.
    2. Yushi Tsunoda & Yusuke Zennyo, 2021. "Platform Information Transparency and Effects on Third‐Party Suppliers and Offline Retailers," Production and Operations Management, Production and Operations Management Society, vol. 30(11), pages 4219-4235, November.
    3. Noriaki Matsushima & Tomomichi Mizuno, 2018. "Supplier encroachment and retailer effort," ISER Discussion Paper 1027, Institute of Social and Economic Research, Osaka University.
    4. Cong Pan, 2016. "Retailer’s product line choice with manufacturer’s multichannel marketing," ISER Discussion Paper 0976, Institute of Social and Economic Research, Osaka University.
    5. Jumpei Hamamura & Yusuke Zennyo, 2021. "Retailer voluntary investment against a threat of manufacturer encroachment," Marketing Letters, Springer, vol. 32(4), pages 379-395, December.

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