Traditional research identified equilibrium marketing channel competition and coordination by using a classical demand function, and classical economic theory often ignored transaction costs. This research develops channel decision marking when transaction costs exist. Game theory is used to compare a non-cooperative equilibrium of a differential game played under Stackelberg strategies.By focusing on the effect of the retailer’s (or distributor’s) transaction costs with respect to the marketing decision variables, especially the sales volume and the profit of channel members. Therefore,this research is to point out a business need to pay attention to the customer vale.
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