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Commentary —On “Equilibrium Returns Policies in the Presence of Supplier Competition”

Author

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  • Yongquan Lan

    (School of Management, University of Science and Technology of China, 230026 Hefei, Anhui, People's Replublic of China; and Department of Management Sciences, City University of Hong Kong, Kowloon, Hong Kong SAR)

  • Yanzhi Li

    (Department of Management Sciences, City University of Hong Kong, Kowloon, Hong Kong SAR)

  • Zhongsheng Hua

    (School of Management, University of Science and Technology of China, 230026 Hefei, Anhui, People's Republic of China)

Abstract

The recent article by Bandyopadhyay and Paul [Bandyopadhyay S, Paul AA (2010) Equilibrium returns policies in the presence of supplier competition. Marketing Sci. 29(5):846–857] searched for an explanation for the phenomenon the authors termed the “Pasternack paradox,” i.e., why full-credit return policies, which were considered suboptimal from the perspective of channel coordination, are prevalent in practice. The authors argued that the underlying reason is that it is the competition between suppliers rather than the coordination among channel members that dominates business practice. We show that their model actually fails to generate the claimed results. Counterexamples are given. Alternative explanations are therefore needed for the seemingly suboptimal business practice.

Suggested Citation

  • Yongquan Lan & Yanzhi Li & Zhongsheng Hua, 2013. "Commentary —On “Equilibrium Returns Policies in the Presence of Supplier Competition”," Marketing Science, INFORMS, vol. 32(5), pages 821-823, September.
    • Handle: RePEc:inm:ormksc:v:32:y:2013:i:5:p:821-823
    DOI: 10.1287/mksc.1120.0744
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    Cited by:

    1. Xu, Jianjun & Keblis, Matthew F. & Feng, Youyi & Chang, Yanling, 2017. "Optimal sourcing from a pool of suppliers with nonidentical salvage values," International Journal of Production Economics, Elsevier, vol. 193(C), pages 392-405.
    2. Lan, Yongquan & Li, Yanzhi & Papier, Felix, 2018. "Competition and coordination in a three-tier supply chain with differentiated channels," European Journal of Operational Research, Elsevier, vol. 269(3), pages 870-882.
    3. Thanh Tran & Haresh Gurnani & Ramarao Desiraju, 2018. "Optimal Design of Return Policies," Marketing Science, INFORMS, vol. 37(4), pages 649-667, August.

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