Analyzing the Dual Channels for Online Retailer

Abstract

By constructing the exponential delay cost function, we formulate the consumer decision model based on the threshold strategies in dual-mechanism, and prove that there exists a unique symmetric Nash equilibrium in which the high-valuation consumers use a threshold policy to choose between the two selling channels. On the basis of the consumer’s threshold strategies, taking the auction length, the auctioned quantity in each period, and the posted price as the decision variables, we develop the seller’ optimal decision model in dual-mechanism, and show the optimal auction design principle and strategy by numerical analysis.