Inefficiency of dual channel in E-business: Asymmetric cost structure and customer behavior

Yongma Moon, Tao Yao

Research output: Chapter in Book/Report/Conference proceedingConference contribution

2 Scopus citations

Abstract

One challenging question E-business executives face is whether to construct the direct Internet channel in addition to the traditional retail channel. In this paper, we develop a model for strategic dual channel investment under uncertainty and strategic customer behaviors. Based on this model, we provide analytical solutions for thresholds that dual channel makes less profit than a single channel. Moreover, we studied the role of a cost structure for the Internet channel based on this threshold. Companies are likely to have wider inefficiency region as the cost for the Internet channel increases. We provide numerical examples to analyze the effects of price volatility, uncertainty, on the inefficiency of dual channel and the effects of an asymmetric cost structure.

Original languageEnglish (US)
Title of host publication2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI
DOIs
StatePublished - Dec 1 2007
Event2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI - Philadelphia, PA, United States
Duration: Aug 27 2007Aug 29 2007

Publication series

Name2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI

Other

Other2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI
CountryUnited States
CityPhiladelphia, PA
Period8/27/078/29/07

All Science Journal Classification (ASJC) codes

  • Information Systems
  • Management Science and Operations Research

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    Moon, Y., & Yao, T. (2007). Inefficiency of dual channel in E-business: Asymmetric cost structure and customer behavior. In 2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI [4383868] (2007 IEEE International Conference on Service Operations and Logistics, and Informatics, SOLI). https://doi.org/10.1109/SOLI.2007.4383868