Journal of Northeastern University Natural Science ›› 2016, Vol. 37 ›› Issue (9): 1353-1358.DOI: 10.12068/j.issn.1005-3026.2016.09.028

• Management Science • Previous Articles     Next Articles

Manufacturers’ Process Innovation Decisions Under the Condition of Transnational Retailers’ Countervailing Power

LI Kai, LI Wei, AN Gang   

  1. School of Business Administration, Northeastern University, Shenyang 110169, China.
  • Received:2015-06-10 Revised:2015-06-10 Online:2016-09-15 Published:2016-09-18
  • Contact: LI Wei
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Abstract: A vertical market model which consists of a monopolistic manufacturer and competitive retailers was built. The manufacturers’s optimal process innovation decisions before and after the transnational retailers’ entry into the market were investigated by introducing countervailing power into the model. Moreover, the impact of the transnational retailers’ countervailing power on the manufacturers’ process innovation decisions was studied by comparing the manufacturer’s optimal process innovation decisions in three different cases, including the cases before and after the transnational retailers’ entry and the case of vertical integration. It was found that the increase of transnational retailers’ countervailing power will promote manufacturers’ process innovation. In addition, when countervailing power is large enough, the optimal level of process innovation will be higher than that in vertical integration. Finally, the mechanism behind this conclusion was analyzed, and a numerical example was given to show the influence of parameter change on the conclusion.

Key words: transnational retailer, countervailing power, process innovation, Cournot competition, wholesale price discount

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