The length of product line in distribution channels

Yunchuan Liu, Tony H Cui

Research output: Contribution to journalArticlepeer-review

39 Scopus citations

Abstract

This paper studies a manufacturer's optimal decisions on extending its product line when the manufacturer sells through either a centralized channel or a decentralized channel. We show that a manufacturer may provide a longer product line for consumers in a decentralized channel than in a centralized channel if the market is fully covered. In addition, a manufacturer's decisions on the length of its product line may not always be optimal from a social welfare perspective in either a centralized or a decentralized channel. Under certain conditions, a decentralized channel can provide the product line length that is socially optimal, whereas a centralized channel cannot.

Original languageEnglish (US)
Pages (from-to)474-482
Number of pages9
JournalMarketing Science
Volume29
Issue number3
DOIs
StatePublished - May 2010

Keywords

  • Consumer heterogeneity
  • Distribution channel
  • Game theory
  • Product line

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