The influences of channel subsidy on consumers in a dual-channel supply chain

  • Zhang Zhao
  • Ming-Hsiang Chen
  • Hua KeEmail author
  • Alberto Sa Vinhas
Methodologies and Application


This paper examines the influence of subsidies provided by traditional (e.g., a bricks-and-mortar retail mall) and electronic (e.g., Alibaba and Amazon) retail platforms to consumers. We look at the competition between traditional retailers, who sell in a shopping mall, and e-tailers, who sell on the electronic platform. Our focus is on analyzing and demonstrating how these channel subsidies influence (1) pricing behaviors for the e-tailer and the traditional retailer and (2) consumers utilities and channel choices. The main findings are as follows. Whether from the perspective of consumers utilities or from the perspective of consumer channel choice, consumers with different WTP are influenced differently by channel subsidies. While both types of subsidy help the two channels attract some low willingness to pay consumers, the electronic channel subsidy can help the electronic channel attract consumers who are willing to pay more from the traditional channel. The results can help retailers and channel subsidy providers to understand how channel subsidies work, and the differences in the WTP of consumers who purchase products before and after subsidies. This understanding informs retailers’ segmentation, targeting and pricing decisions and helps subsidy providers to make channel subsidy-related decisions.


Channel subsidy Dual-channel supply chain Consumer surplus Consumption decision Pricing decision 


Compliance with ethical standards

Conflict of interest

The authors declare that they have no conflict of interest.

Ethical approval

This article does not contain any studies with human participants or animals performed by any of the authors.


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.School of Business and Tourism ManagementYunnan UniversityKunmingChina
  2. 2.School of Hospitality Business Management, Carson College of BusinessWashington State UniversityPullmanUSA
  3. 3.Tourism and Social Administration CollegeNanjing Xiaozhuang UniversityNanjingChina
  4. 4.School of Economics and ManagementTongji UniversityShanghaiChina
  5. 5.Carson College of BusinessWashington State UniversityVancouverUSA

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