Abstract

In this work, we explore the impacts of power structure on manufacturer's innovation investment and profit in a dual-channel supply chain, where the manufacturer distributes her products through both retailing and online direct channels in the E-commerce age. We analyze the case where the manufacturer has dominant bargaining power and the case where the retailer has dominant bargaining power. We show that, when the manufacturer has dominant power, his investment is less than that when the retailer has dominant power. However, the manufacturer's profit when he has dominant power is not always higher than that when he is a decision follower. In addition, we show that the higher the price and innovation sensitivity, the higher the manufacturer's profit and innovation investment will be; while the higher the market base and investment efficiency, the lower the profit and innovation investment will be.

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