Exclusive vs. competitive retailing: Overseas vaccine supplier’s channel selection considering profit and social responsibility objectives

Abstract Many countries/regions such as UK and China have forbidden cross channel retailing for overseas vaccines to achieve better quality control. Therefore, it becomes a critical decision for an overseas vaccine supplier to select a local retailer: An exclusive retailer helps avoid intense channel competition with the local vaccine supplier (referred to as Exclusive Retailing), while relying on the competitive local vaccine supplier for sale (referred to as Competitive Retailing) might induce the latter’s intense self-competition, which also benefits the overseas vaccine supplier. In this paper, we formulate these two representative channel structures by considering the overseas vaccine supplier’s profit and social responsibility objectives. We build game-theoretical models and derive the equilibrium vaccine prices, supply quantities and the vaccine supplier’s utilities. Interestingly, we find that the overseas vaccine supplier will prefer Competitive Retailing when the overseas vaccine and the local vaccine are highly substitutable, regardless of its objective of profit-seeking or social responsibility seeking. We identify two interactive forces, namely, wholesale price effect and demand varying effect, to interpret the rationality of the overseas vaccine supplier’s preferences over exclusive and Competitive Retailing strategies.