Abstract: Considering a dual-channel supply chain where the manufacturer operates the online channel and the traditional retailer operates the offline channel in the uniform price setting, to study the two members optimal unified pricing and service effort strategy with bidirectional free-riding, and investigate how free riding affects the two members pricing, service strategies and profits. The results show that(ⅰ)compared to the situation where there is no free-riding behavior between online and offline channels, the uniform price, service effort level and total profit of the dual channels with bidirectional free-riding are higher.(ⅱ)In the manufacturer-Stackelberg scenario, the uniform price and service effort level will increase with the increasement of the degree of free riding; in the retailer-Stackelberg scenario, the price and service level will increase with the increasement of the degree of offline free riding, but will hardly be affected by online free riding behavior.(ⅲ)If the manufacturer dominates the supply chain, offline free-riding behavior will increase the both members profits, while online free-riding behavior is only increasing the manufacturer profit but decreasing the retailer profit; if the retailer dominate the supply chain, the profits of both manufacturer and retailer can be enhanced by the free riding behavior between the two channels. In general, bidirectional free-riding behavior is beneficial to the dual-channel supply chain, that is, the total profit of the supply chain will increase with the increasement of the degree of free-riding between channels.

Key words: bidirectional free-riding, dual-channel supply chain, unified pricing, service effort