The Impact of Dual-Channel Investments and Contract Mechanisms on Telecommunications Supply Chains
This study examines how contract structures influence coordination and innovation incentives in dual-channel telecommunications supply chains. We consider a setting where a mobile network operator (MNO) supplies services both directly to consumers and indirectly through a mobile virtual network oper...
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| Format: | Article |
| Language: | English |
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MDPI AG
2025-07-01
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| Series: | Systems |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2079-8954/13/7/539 |
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| Summary: | This study examines how contract structures influence coordination and innovation incentives in dual-channel telecommunications supply chains. We consider a setting where a mobile network operator (MNO) supplies services both directly to consumers and indirectly through a mobile virtual network operator (MVNO), which competes in the retail market. Using a game-theoretic framework, we evaluate how different contracts—single wholesale pricing, revenue sharing, and quantity discounts—shape strategic decisions, particularly in the presence of investment spillovers between parties. A key coordination problem emerges from the externalized gains of innovation, where one party’s investment generates value for both participants. Our results show that single wholesale and revenue sharing contracts often lead to suboptimal investment and profit outcomes. In contrast, quantity discount contracts, especially when combined with appropriate transfer payments, improve coordination and enhance the total performance of the supply chain. We also find that innovation led by the MVNO, while generally less impactful, can still yield reciprocal benefits for the MNO, reinforcing the value of cooperative arrangements. These findings emphasize the importance of contract design in managing interdependence and improving efficiency in decentralized supply chains. This study offers theoretical and practical implications for telecommunications providers and policymakers aiming to promote innovation and mutually beneficial outcomes through well-aligned contractual mechanisms. |
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| ISSN: | 2079-8954 |