Abstract：This study investigated how two types of free-riding effects may influence quality disclosure and pricing decision in a dual-channel supply chain, consisting of an upstream manufacturer, which owns an electronic channel, and a downstream retailer. In this paper we incorporated consumer attentiveness, as well as search costs, into a model of quality disclosure, to describe end consumers' surplus of purchase and both channels' demand. Then we derived the channel's optimal pricing strategy and disclosure conditions under two free-riding formats, respectively. And the impact of consumer attentiveness, search costs and product differentiation between two channels on quality disclosure was analyzed, too. We next compared the decisions of the manufacturer and the retailer under two free-riding formats to derive the influence exerted on the point-of-sale terminal free-riding effect. Our results suggest that:when considering free-riding effect, a retailer discloses the quality to consumers if and only if the quality is appropriate and the wholesale price is sufficiently low; a retailer should disclose less quality information as the share of partially informed consumers (informed about one channel but not the other) increases, as consumer search costs increase, or as product differentiation between two channels decreases; the point-of-sale terminal free-riding effect leads to a lower incentive for information revelation; if some conditions are satisfied for consumer attentiveness, more information will be provided than that when the wholesale price free-riding effect is considered only; when the point-of-sale terminal free-riding parameter is sufficiently high, the greater it is, the more incentives a manufacture will have to induce his retailer to disclose information.
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2016, Vol. 36 
