Process Innovation of Different Channels in Competitive Environment

doi:10.11885/j.issn.1674-5094.2017.03.14.02

Abstract

Abstract: This paper studies competing manufacturers with different distribution channels:one manufacturer sells its products by itself,the other through exclusive retailers. This paper investigates the conditions when two manufacturers invest in process innovation to reduce the production costs,and identifies the dominant equilibrium for manufacturer from the aspect of performance improvement. We also analyze the impact of competition between two channels and coefficient of innovation investment on the game equilibriums of process innovation. The results show that investing process innovation is a dominant equilibrium for manufacturer in direct selling when the coefficient of innovation investment is relatively big,but the threshold of coefficient of innovation investment is influenced by the intensity of competition between the two channels. The manufacturer in distribution channel will profit when he invests in process innovation if his competitor,i.e. the manufacturer in direct selling won't invest in process innovation;if the manufacturer in direct selling invests in process innovation,the manufacturer in distribution channel will realize performance improvement when he invests less in process innovation in relatively weak competing environment and invests more in process innovation without considering the intensity of competition between two channels.

Key words: channel competition, process innovation, game equilibrium, direct selling, distribution

CLC Number:

F273

ZHAO Haixia. Process Innovation of Different Channels in Competitive Environment[J]. 西南石油大学学报(社会科学版), 2017, 19(4): 19-26.

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URL: http://journal15.magtechjournal.com/Jwk_xnsk/EN/10.11885/j.issn.1674-5094.2017.03.14.02

http://journal15.magtechjournal.com/Jwk_xnsk/EN/Y2017/V19/I4/19

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