Abstract We consider a situation where a manufacturer's electronic direct channel and a retailer's traditional retail channel sell heterogeneous products in a dualchannel supply chain and that retailer's service has a negative spillover effect to electronic direct channel. By employing consumer utility theory, we firstly establish a consumer utility function, which depicts the product difference and service negative spillover effect appropriately. Then we build demand models and profit models and analyze the optimal decisions and maximum profits in centralized and decentralized situations, respectively. On this basis, a twopart tariff improvement strategy is proposed. The results show that differentiation strategy can benefit both the manufacturer and the retailer, dualchannel supply chain can achieve Pareto improvement by twopart tariff strategy, and that there exists countless kind of twopart tariff strategies which can be designed in flexibility.
2014, Vol. 11 
