A Uniform Pricing and Channel Selection Model with Random Demand

This paper illustrates the wholesaling price-only contract scenario where the manufacturer as a leader decides the wholesale price, and then the retailer gives his optimal retail price, marketing effort and order quantity. Using an iso-price-elastic multiplicative demand function, we could obtain the equilibrium solutions. But when demand follows linear additive function, we couldn't obtain the equilibrium solutions. Furthermore, we draw similar conclusions on manufacturers' channel selection. That is, manufacturers prefer to build direct channel only with lower channel costs, which also change retailers' profit.