Pricing Research for a Dual-channel Supply Chain with Free Riding Behavior

As the science and technology are leaping forward, online channels progressively gain the favor of customers based on their unique shopping experience that differs from the traditional retail channels, and establish a dual-channel retail model with the traditional retail channels. The differences between channels will enable consumers to first experience products or services offline, and then buy products online at a cheaper price. This has formed a free-riding effect. Under such effect in dual channels, how e-commerce retailers and traditional retailers determine the price of channel products is to be discussed in this paper. Based on a brief exposition of the current economic environment, the research status of dual-channel and free-rider vehicles is first analyzed to locate the research work of this paper. Then, under this circumstance, the situation is addressed that e-commerce retailers have zero service levels, and the traditional retailer can provide services and establish a pricing game model, the product's dual-channel pricing strategy is analyzed by using the game model. Finally, the actual availability and effectiveness of the built game model are verified with the example analysis.