Please use this identifier to cite or link to this item: https://doi.org/10.1287/mksc.1040.0091
Title: Reply to "do returns policies intensify retail competition?"
Authors: Padmanabhan, V.
Png, I.P.L. 
Keywords: Demand uncertainty
Pricing
Retail competition
Returns policies
Issue Date: 2004
Citation: Padmanabhan, V., Png, I.P.L. (2004). Reply to "do returns policies intensify retail competition?". Marketing Science 23 (4) : 614-618. ScholarBank@NUS Repository. https://doi.org/10.1287/mksc.1040.0091
Abstract: Returns policies are common in many sectors of retail distribution. Padmanabhan and Png (1997) showed that with demand uncertainty, a returns policy could improve manufacturer profitability under certain conditions. Wang (2004) showed that returns policies do not change manufacturer profitability when demand is certain and retailing is competitive. We show that returns policies do increase manufacturer profitability by attenuating retailer price competition when demand is low and intensifying competition when demand is high. Importantly, this effect holds only in the presence of demand uncertainty. Further, the conditions under which a returns policy raises the manufacturer's profit are weaker when retailing is a duopoly than when retailing is a monopoly. This suggests that returns policies serve both to manage competition and mitigate demand uncertainty.
Source Title: Marketing Science
URI: http://scholarbank.nus.edu.sg/handle/10635/42531
ISSN: 07322399
DOI: 10.1287/mksc.1040.0091
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