IDEAS home Printed from https://ideas.repec.org/a/inm/ormksc/v34y2015i5p722-738.html
   My bibliography  Save this article

Matching in the Sourcing Market: A Structural Analysis of the Upstream Channel

Author

Listed:
  • Jian Ni

    (Carey Business School, Johns Hopkins University, Baltimore, Maryland 21202)

  • Kannan Srinivasan

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

Abstract

Building on the structural two-sided matching model, we develop a framework to study the sourcing market in the context of marketing firms matching with manufacturers. Both sides prefer partners that could generate significant values with better sourcing process abilities. Moreover, experienced manufacturers are preferred by the branded marketing firms who may even be willing to compensate the matching intermediary more for facilitating that preference. Empirical research, measuring the values of such matching and the intermediary’s pricing (through commission) on observed marketing firms’ characteristics and the low-cost manufacturers and the deals that result, is problematic, when some of the characteristics are only partially observed and the matching is endogenous. With the matching model, we can control for endogenous matching. We find evidence of positive assortative matching of pairs’ size on both sides of the market. We also find that manufacturers’ location and tenure, and whether the marketing firms are listed, are important factors in identifying the preferred matching partners and the related ranking. Without controlling for endogenous matching, the intermediary’s pricing equation estimates are biased, especially for the marketing firms that specialize in luxury products.

Suggested Citation

  • Jian Ni & Kannan Srinivasan, 2015. "Matching in the Sourcing Market: A Structural Analysis of the Upstream Channel," Marketing Science, INFORMS, vol. 34(5), pages 722-738, September.
    • Handle: RePEc:inm:ormksc:v:34:y:2015:i:5:p:722-738
    DOI: 10.1287/mksc.2015.0922
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mksc.2015.0922
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mksc.2015.0922?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. John Geweke, 1999. "Using simulation methods for bayesian econometric models: inference, development,and communication," Econometric Reviews, Taylor & Francis Journals, vol. 18(1), pages 1-73.
    2. Park, Minjung, 2013. "Understanding merger incentives and outcomes in the US mutual fund industry," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4368-4380.
    3. Sha Yang & Yuxin Chen & Greg Allenby, 2003. "Bayesian Analysis of Simultaneous Demand and Supply," Quantitative Marketing and Economics (QME), Springer, vol. 1(3), pages 251-275, September.
    4. Stoll, Hans R. & Whaley, Robert E., 1983. "Transaction costs and the small firm effect," Journal of Financial Economics, Elsevier, vol. 12(1), pages 57-79, June.
    5. Daniel F. Spulber, 1996. "Market Microstructure and Intermediation," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 135-152, Summer.
    6. John Geweke, 2004. "Getting It Right: Joint Distribution Tests of Posterior Simulators," Journal of the American Statistical Association, American Statistical Association, vol. 99, pages 799-804, January.
    7. Daniel A. Ackerberg & Maristella Botticini, 2002. "Endogenous Matching and the Empirical Determinants of Contract Form," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 564-591, June.
    8. Sha Yang & Yuxin Chen & Greg Allenby, 2003. "Reply to Comments on “Bayesian Analysis of Simultaneous Demand and Supply”," Quantitative Marketing and Economics (QME), Springer, vol. 1(3), pages 299-304, September.
    9. Manski, Charles F., 1975. "Maximum score estimation of the stochastic utility model of choice," Journal of Econometrics, Elsevier, vol. 3(3), pages 205-228, August.
    10. Eeckhout, Jan, 2000. "On the uniqueness of stable marriage matchings," Economics Letters, Elsevier, vol. 69(1), pages 1-8, October.
    11. John Geweke, 1999. "Using Simulation Methods for Bayesian Econometric Models," Computing in Economics and Finance 1999 832, Society for Computational Economics.
    12. Chen, Jiawei & Song, Kejun, 2013. "Two-sided matching in the loan market," International Journal of Industrial Organization, Elsevier, vol. 31(2), pages 145-152.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zeng, Fue & Huang, Ying & Xiao, Zhenxin & Wang, Cheng Lu & Dong, Maggie Chuoyan, 2021. "The dark side of channel rewards for observer distributors: A social comparison perspective," Journal of Business Research, Elsevier, vol. 132(C), pages 441-452.
    2. Tat Chan & Yijun Chen & Chunhua Wu, 2023. "Collaborate to Compete: An Empirical Matching Game Under Incomplete Information in Rank-Order Tournaments," Marketing Science, INFORMS, vol. 42(5), pages 1004-1026, September.
    3. Maggie Chuoyan Dong & Fue Zeng & Chenting Su, 2019. "Network embeddedness as a dependence-balancing mechanism in developing markets: differential effects for channel partners with asymmetric dependencies," Journal of the Academy of Marketing Science, Springer, vol. 47(6), pages 1064-1084, November.
    4. Weining Bao & Jian Ni & Shubhranshu Singh, 2018. "Informal Lending in Emerging Markets," Marketing Science, INFORMS, vol. 37(1), pages 123-137, January.
    5. Qiyuan Wang, 2024. "For-Sale-by-Owner Platforms and Intermediation Pricing: Evidence from a Natural Experiment," Marketing Science, INFORMS, vol. 43(2), pages 346-359, March.
    6. Darcy K. Fudge Kamal & Florence Honoré & Cristina Nistor, 2021. "When the weak are mighty: A two‐sided matching approach to alliance performance," Strategic Management Journal, Wiley Blackwell, vol. 42(5), pages 917-940, May.
    7. Wei, Liyuan & Yang, Yupin, 2022. "An empirical investigation of director selection in movie preproduction: A two-sided matching approach," International Journal of Research in Marketing, Elsevier, vol. 39(3), pages 888-906.
    8. Florence Honoré & Martin Ganco, 2023. "Entrepreneurial teams' acquisition of talent: Evidence from technology manufacturing industries using a two‐sided approach," Strategic Management Journal, Wiley Blackwell, vol. 44(1), pages 141-170, January.
    9. Wen, Xin & Choi, Tsan-Ming & Chung, Sai-Ho, 2019. "Fashion retail supply chain management: A review of operational models," International Journal of Production Economics, Elsevier, vol. 207(C), pages 34-55.
    10. Liu, Zhiqiang & Huang, Yanyi & Huang, Ying & Song, Yiping Amy & Kumar, Ajay, 2022. "How does one-sided versus two-sided customer orientation affect B2B platform’s innovation: Differential effects with top management team status," Journal of Business Research, Elsevier, vol. 141(C), pages 619-632.
    11. Fue Zeng & Qing Ye & Zhilin Yang & Jing Li & Yiping Amy Song, 2022. "Which Privacy Policy Works, Privacy Assurance or Personalization Declaration? An Investigation of Privacy Policies and Privacy Concerns," Journal of Business Ethics, Springer, vol. 176(4), pages 781-798, April.
    12. Yao (Alex) Yao & Sha Yang & K. Sudhir, 2021. "Two-Sided Matching Between Fashion Firms and Publishers: When Firms Strategically Target Consumers for Brand Image," Working Papers 21-07, NET Institute.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jiawei Chen, 2006. "Two-Sided Matching and Spread Determinants in the Loan Market," Working Papers 060702, University of California-Irvine, Department of Economics.
    2. Geweke, J. & Joel Horowitz & Pesaran, M.H., 2006. "Econometrics: A Bird’s Eye View," Cambridge Working Papers in Economics 0655, Faculty of Economics, University of Cambridge.
    3. Darcy K. Fudge Kamal & Florence Honoré & Cristina Nistor, 2021. "When the weak are mighty: A two‐sided matching approach to alliance performance," Strategic Management Journal, Wiley Blackwell, vol. 42(5), pages 917-940, May.
    4. Li, Mingliang & Tobias, Justin L., 2011. "Bayesian inference in a correlated random coefficients model: Modeling causal effect heterogeneity with an application to heterogeneous returns to schooling," Journal of Econometrics, Elsevier, vol. 162(2), pages 345-361, June.
    5. Florence Honor� & Martin Ganco, 2016. "Entrepreneurial teams' acquisition of talent: a two-sided approach," Working Papers 16-45, Center for Economic Studies, U.S. Census Bureau.
    6. Yihui Pan, 2017. "The Determinants and Impact of Executive-Firm Matches," Management Science, INFORMS, vol. 63(1), pages 185-200, January.
    7. Farmer, Roger E.A. & Nicolò, Giovanni, 2018. "Keynesian economics without the Phillips curve," Journal of Economic Dynamics and Control, Elsevier, vol. 89(C), pages 137-150.
    8. Adnan Haider Bukhari & Safdar Ullah Khan, 2008. "A Small Open Economy DSGE Model for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(4), pages 963-1008.
    9. Kano, Takashi, 2009. "Habit formation and the present-value model of the current account: Yet another suspect," Journal of International Economics, Elsevier, vol. 78(1), pages 72-85, June.
    10. Adolfson, Malin & Laseen, Stefan & Linde, Jesper & Villani, Mattias, 2007. "Bayesian estimation of an open economy DSGE model with incomplete pass-through," Journal of International Economics, Elsevier, vol. 72(2), pages 481-511, July.
    11. Jouini, Nizar & Rebei, Nooman, 2012. "The Welfare Implications of Services Liberalization in a Developing Country," Conference papers 332271, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Thomas Sargent & Noah Williams & Tao Zha, 2006. "Shocks and Government Beliefs: The Rise and Fall of American Inflation," American Economic Review, American Economic Association, vol. 96(4), pages 1193-1224, September.
    13. Francesco Bianchi, 2013. "Regime Switches, Agents' Beliefs, and Post-World War II U.S. Macroeconomic Dynamics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(2), pages 463-490.
    14. Liang Guo, 2006. "—Removing the Boundary Between Structural and Reduced-Form Models," Marketing Science, INFORMS, vol. 25(6), pages 629-632, 11-12.
    15. Gelfer, Sacha & Gibbs, Christopher G., 2023. "Measuring the effects of large-scale asset purchases: The role of international financial markets and the financial accelerator," Journal of International Money and Finance, Elsevier, vol. 131(C).
    16. Munch, Jakob R. & Nguyen, Daniel X., 2014. "Decomposing firm-level sales variation," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 317-334.
    17. Hajargasht, Gholamreza & Rao, D.S. Prasada, 2019. "Multilateral index number systems for international price comparisons: Properties, existence and uniqueness," Journal of Mathematical Economics, Elsevier, vol. 83(C), pages 36-47.
    18. Cúrdia, Vasco & Finocchiaro, Daria, 2013. "Monetary regime change and business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 37(4), pages 756-773.
    19. Villa, Stefania, 2013. "Financial frictions in the euro area: a Bayesian assessment," Working Paper Series 1521, European Central Bank.
    20. John B. Taylor & Volker Wieland, 2012. "Surprising Comparative Properties of Monetary Models: Results from a New Model Database," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 800-816, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormksc:v:34:y:2015:i:5:p:722-738. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.