Download or read book Two Analytical Essays in Distribution Channels written by Dalu Fang and published by . This book was released on 2017 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay 2: Advance Selling in a Supply Chain - Advance selling has gained much popularity in recent years. Developing closely alongside Internet technology, advance selling enables sellers to expand the market by serving consumers who are not accessible with traditional spot selling. Conversely, due to the temporal separation between purchasing and consumption, consumers incur a disutility in advance buying, which puts a downward pressure on price and makes advance buying particularly appealing to price-sensitive, low-end consumers. In this paper, based on these two stylized facts and abstract from capacity and information issues, we develop a direct seller model and a bilateral-monopoly supply chain model to investigate a seller's advance selling strategy (i.e., spot selling only, advance selling only, or both spot and advance selling) and how the seller's decision is affected by a supplier. Analysis shows that because a supplier is motivated to induce the market equilibrium that is most favorable to itself, it has important impact on the downstream firm's advance selling strategy. The two firms consider different factors when making their respective decisions. The seller will adopt it only if advance selling is able to yield a positive margin, whereas the supplier's decisions on the wholesale price and whether to use the wholesale price to change the seller's strategy are dependent on advance selling's ability to expand the market size. Conventional wisdom suggests that due to the double marginalization problem, a seller in a supply chain is faced with a high marginal cost that discourages the seller to adopt advance selling to expand the market and price-discriminate consumers. We show that this is not necessarily the case in our model. We elucidate the conditions under which a seller in a supply chain has greater incentives to adopt a spot and advance selling strategy than a direct seller.