Abstract
Inflation compresses the margins that finance digital coupon programs on e-commerce platforms. This study examines how inflation affects coupon governance in a decentralized manufacturer–e-tailer supply chain and what the allocation of promotional authority implies for the chain’s economic sustainability, measured by channel profit, efficiency relative to an integrated benchmark, promotional cost per unit sold, consumer surplus, and the inflation rate at which each firm can still cover its fixed costs. A Stackelberg model compares manufacturer-funded coupons, e-tailer-funded coupons, cooperative cost sharing, and independent dual coupons enabled by platform stacking. Inflation lowers coupon values and both firms’ profits across all regimes, whereas its effect on posted retail prices depends on coupon effectiveness. In the model, e-tailer funding outperforms manufacturer funding because the party that pays for the coupon also captures the higher retail margin that the coupon supports. Cost sharing raises coupon intensity but lowers channel profit, leaving the e-tailer worse off than under either single-funder regime, making it the regime in which the e-tailer becomes unviable first. Dual coupons yield the highest decentralized profits, but the advantage reflects the division of promotional effort between issuers with separate redemption costs; it shrinks as redemption pools overlap or the two coupons become substitutes, and vanishes when stacking is restricted. Proportional advantages between regimes narrow with inflation only when inflation also raises consumers’ price sensitivity.