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- Title
Contract design considering data driven marketing: with and without the cap and trade regulation.
- Authors
Zhang, Jingxin; Zhang, Jianxiong; Xu, Chunqiu
- Abstract
Due to the natural advantage of data acquisition, data driven marketing (DDM) has been widely adopted online. The major concern of managers, especially when facing severe environmental issues, is to adjust proper measures regarding DDM promotions (including consumers' DDM preference and offline free riding), so as to ensure efficient implementation of the cap and trade regulation (CTR). We developed two models: No-CTR and CTR under centralized and decentralized scenarios, and then proposed corresponding contracts to achieve Pareto improvement. The validity of both coordination schemes has been demonstrated. Contrary to conventional wisdom, the results indicate that encouraging DDM promotions and consumers' environmental awareness are not always beneficial to the manufacturer or retailers. Certain conditions should be met based on promotions and wholesale price. Secondly, comparing No-CTR with CTR, promotions should be set for different carbon quotas to ensure all members prefer CTR. Especially, when carbon quota is moderate, below a certain level can also be optimal. Furthermore, numerical analysis suggests that with the increase of carbon trading price, the online quantity will evolve from downward to upward, as will both retailers' profit. Entrepreneurs should be mindful of balancing the trade-offs contingent on DDM promotion effect because it plays an essential role in CTR implementation efficiency. In our model, stochastic demand is also considered.
- Subjects
TRADE regulation; MARKET capitalization; BUSINESSPEOPLE; CARBON offsetting; CARBON pricing; CONSUMER preferences; WHOLESALE prices
- Publication
Annals of Operations Research, 2024, Vol 333, Issue 1, p157
- ISSN
0254-5330
- Publication type
Article
- DOI
10.1007/s10479-023-05678-8