Dual-Channel Supply Chain Coordination with Loss-Averse Consumers

Most studies on supply chain coordination assume that consumers are rational. However, with the development of e-commerce, consumer-bounded rationality has become an important issue respect to coordination. Based assumption some loyal offline shop and others reference-dependent, this article examines mechanism vertical restraints their competitive effects. This research study found compared rational used in previous literature, help internalize “channel price gap externality” when loss averse. When separately operating, will set a higher due its consumers’ loyalty willingness pay. given positive externality online retail sales, is still lower than level under integration. upstream manufacturer achieves restraint contracts, channel internalized, expands stimulate loss-averse purchasing decisions.