Market entry decision in presence of a common supplier

The paper studies a global retailer's optimal entry decision when the retailer shares the same supplier with the local retailer in the domestic market.We analyze the impact of the entry decision on supplier's wholesale price and retailers' procurement quantities.The entry decision is categorized into three types: market-expansion-oriented entry,procurement-oriented,and double-beneficial entry.The results show that when the market size of firm's target market is relatively larger than that of its original market,firm's entry is market-expansion-oriented;and when the former is relatively smaller than the latter,firm's entry is procurement-oriented;and firm's entry is double beneficial only when the size of both markets are similar.We also consider the influence of the entry cost on firm's entry decision.We show that the possibility of the foreign firm entering the domestic market decreases as the entry cost increases.And when the entry cost is high enough,firm's entry can be either market-expansion-oriented or procurement-oriented;in other words,firm can not make positive profits in both markets.