Contract design considering data driven marketing: with and without the cap and trade regulation
Annals of Operations Research(2024)
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.
MoreTranslated text
Key words
Data driven marketing,Cap and trade regulation,Enovated cost sharing contract,Offline free riding
AI Read Science
Must-Reading Tree
Example
![](https://originalfileserver.aminer.cn/sys/aminer/pubs/mrt_preview.jpeg)
Generate MRT to find the research sequence of this paper
Chat Paper
Summary is being generated by the instructions you defined