Abstract: Free riding behavior is more and more popular due to service spillover effect. Based on the theory of consumer utility, and by building a Stackelberg game model under decentralized decision and centralized decision-making led by the manufacturer, this paper pays attention to the impact of consumer free-rider factors and channel service levels on channel pricing, demand and supply chain profits under the conditions that both online direct channels and traditional channels provide services. Results show that the channel prices and supply chain profits increase with the free-riding factor, when the system take centralized decisions, it has a significant effect on the improvement of supply chain profits with the improvement of the service level of online direct sales channels.

Key words: free riding behaviour, service level, Dual-channel Supply Chain