Abstract: In a traditional channel,a manufacturer distributes the product to consumers through a retailer. With the popularity of the Internet,many suppliers engage in dual-channel which consists of traditional channel and direct channel. Meanwhile, the existence of cost-learning effect phenomena has been found for a wide range of industries. However, the extant literature lack study of combining the channel structure problem with cost-learning effect, which motivates us to think about following research question:How does learning effect affect the supply chain members' equilibrium decisions and profits in different supply chain structures? To solve this problem, based on a supply chain with a manufacturer and a retailer, a two-period Stackelberg game model with cost-learning effect in different modes (traditional channel mode and dual-channel mode) is constructed. A pull contract between the manufacturer and the retailer is considered. Backward induction is used to identify the equilibrium of the games. The impacts of cost learning rate on equilibrium decisions and profits of supply chain members and how do they change with time periods in different supply structures are analyzed.
It is found that the market price and wholesale price are decreasing with the increasing learning effect in both traditional channel and dual-channel. Besides, the manufacturer, customer and whole supply chain always benefit but the retailer is hurt by the increasing cost-learning effect in the dual-channel mode. Contrast with the traditional channel mode, it is found that the optimal production quantity increases and price decreases in the second period in the dual-channel mode. Meanwhile, the wholesale price and market price in the dual-channel mode are lower than those in the traditional channel mode. Further, through the numerical study, it is found that the manufacturer and the retailer can achieve a win-win situation in the dual-channel mode under some conditions. This result indicates that the dual-channel mode is still able to alleviate double marginalization effect even with a cost-learning effect. Some theoretical basis and practical guidance for the manufacturer and retailer will be provided to choose the optimal production and price decisions to enhance the profits. This paper will enrich the existing literature on channel structure and cost learning.

Key words: learning effect, dual-channel, two-period, supply chain