Problem definition: This paper studies a supply chain in which a manufacturer sells a product to consumers through a retailer. The retailer makes an endogenous demand improvement decision on whether or not to increase the potential market base, which is imperfectly observed by the manufacturer....

We consider a retailer selling new products with a returns policy. After consumers purchase products and find them undesirable, they can either return the products to the retailer or resell them individually. Both the retailer and consumers incur transaction costs in resale. Anticipating that...