Strategic Manufacturers in Online Cash-Back Shopping

2021 ◽  
pp. 2150005
Author(s):  
Chen Chen ◽  
Yongrui Duan
Keyword(s):  
Theoretical Model ◽  
Wholesale Price ◽  
Consumer Surplus ◽  
Retail Price ◽  
Supply Side ◽  
Surprising Result ◽  
Demand Side ◽  
Product Valuation ◽  
Downstream Competition ◽  
Heterogeneous Consumers

Cash-back industry is now witnessing surging development. Prior works on cash-back sites focus mainly on the demand side, while we are also interested in the supply side. We develop a game theoretical model with a manufacturer, an online retailer, cash-back site(s), and heterogeneous consumers. We find that when the cash-back channel cannot attract new consumers, the manufacturer raises the wholesale price and the retailer raises the retail price, which may lead to the cash-back paradox where all consumers face higher prices. Therefore, when there exists a cash-back channel, the manufacturer is always worse off and the retailer is better off when low-type consumers’ product valuation is intermediate, and consumer surplus and social welfare are both lower. When the retailer affiliates with two competing cash-back sites, the manufacturer contributes to the mitigation of double marginalization problem by raising the wholesale price to a lesser extent, which drives the surprising result that when there exists downstream competition, cash-back sites enjoy higher commission rate and under some circumstances, offer lower cash-back rate and enjoy higher profit. We also show that only when the cash-back channel makes the size of the low-type segment double will the manufacturer be better off with this channel.

Chasing Diamonds and Crowns: Consumer Limited Attention and Seller Response

2021 ◽  
Author(s):  
Zemin (Zachary) Zhong
Keyword(s):  
Theoretical Model ◽  
Regression Discontinuity ◽  
Limited Attention ◽  
Supply Side ◽  
Demand Side ◽  
Demand Shock ◽  
Online Platforms ◽  
Theoretical Predictions ◽  
Shaped Pattern ◽  
Sales Increase

Online platforms often assign sellers summary symbols based on whether their ratings pass certain thresholds. Consumers may focus on the symbols and pay limited attention to the ratings. This bias leads to discontinuously increased demand at the thresholds. I use a theoretical model to illustrate that sellers will lower the prices before their ratings reach the thresholds and increase their prices afterward due to the positive demand shock. I collect data from Taobao to test the theoretical predictions. Using regression discontinuity, I find that on the demand side, the hourly sales increase significantly when a seller passes the threshold, even conditional on the same item. On the supply side, the prices indeed exhibit a V-shaped pattern with respect to the ratings. Furthermore, sellers preemptively increase prices shortly before reaching thresholds, supporting the theoretical predictions. This paper was accepted by Juanjuan Zhang, marketing.

Information Disclosure Model Under Supply Chain Competition with Asymmetric Demand Disruption

2016 ◽  
Vol 33 (06) ◽  
pp. 1650043 ◽  
Author(s):  
Kebing Chen ◽  
Renxing Xu ◽  
Hanwei Fang
Keyword(s):  
Supply Chain ◽  
Asymmetric Information ◽  
Information Disclosure ◽  
Information Structure ◽  
Wholesale Price ◽  
Retail Price ◽  
Supply Side ◽  
Full Information ◽  
Supply Chain Competition ◽  
Information Rent

This paper develops the game models of two symmetric supply chains, each consisting of one manufacturer and one retailer, while both retailers compete in the market with a linear function. The disclosure mechanism is designed when the information of the disrupted demand is asymmetric between supply side and retail side. We first study the model with the full information as a benchmark to explore the effect of asymmetric information on the system. In the case, each manufacturer maximizes her profit while the downstream retailer only obtains the reservation profit. For the case of asymmetric information, each manufacturer can obtain the real information of the disrupted demand by using a menu of contract bundles. For each information structure, there are always robust regions for each manufacturer’s original trading quantity scheme. That is, when the disrupted amount of the demand is sufficiently small, the trading quantity will be unchanged. However, some special measures, e.g., the higher unit wholesale price, should be taken to prevent the retailer from deviating the trading quantity scheme. The high-disruption retailer gets the higher profit due to the information rent. Compared with a single supply chain, Cournot competition results in the less retail price and the lower performance for the whole system.

FDI in Retail: A Theoretical Analysis

2018 ◽  
Vol 6 (1-2) ◽  
pp. 14-23
Author(s):  
Debasmita Basu ◽  
Abhirup Sarkar
Keyword(s):  
Theoretical Model ◽  
Theoretical Analysis ◽  
Wholesale Price ◽  
Retail Price ◽  
Retail Sector ◽  
Wholesale Trade ◽  
Retail Markets ◽  
Jel Classifications

In this article, we build a theoretical model of retail and wholesale trade to analyse the effects of the entry of multinationals in wholesale and retail markets on the size of the domestic retail sector and prices. We show that the domestic retailing sector will expand, the retail price will fall and the wholesale price will go up, if and only if the retailing cost of the MNCs is greater than the retailing cost of the domestic retailers. JEL Classifications: F13, F61, F63

scholarly journals CSR Remanufacturing Supply Chains under WTP Differentiation

2020 ◽  
Vol 12 (6) ◽  
pp. 2197
Author(s):  
Lili Dai ◽  
Tong Shu ◽  
Shou Chen ◽  
Shouyang Wang ◽  
Kin Keung Lai
Keyword(s):  
Sustainable Development ◽  
Corporate Social Responsibility ◽  
Supply Chain ◽  
Social Responsibility ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Consumer Surplus ◽  
Retail Price ◽  
Recycling Rate ◽  
Corporate Social

With the shortage of global resources and the call for sustainable development, the remanufacturing supply chain and the corporate social responsibility of enterprises have attracted extensive attention from scholars. This paper studies a manufacturer-retailer corporate social responsibility (CSR) remanufacturing supply chain in which the manufacturer collects the used products grounded in the willingness to pay (WTP) differentiation. Different from previous literature, this paper first adds WTP differences to the CSR remanufacturing supply chain. Next, we analyze the manufacturer exhibiting CSR activity by Stackelberg game theory in both centralized and decentralized models with a consideration of prices, recycling, consumer surplus, and profits for the chain players in the two models with different CSR ratios. Through calculation and analyses of the models, we note that the chain members have the best status when the consumers’ WTP for new and remanufactured products is within a threshold. Subsequently, we compare the optimal price decisions and the expected profits in the decentralized and centralized systems, and we find that the retail price, wholesale price, and recycling rate decrease with a rising CSR under WTP differentiation. The centralized retail price is lower than the decentralized one. Conversely, the profit is higher when the increment of demand is higher. On top of that, in common cases, the pure and total profits of manufacturing are ascending while the retailer’s profit is descending. We also find that the consumer surplus is increasing in two cases. Finally, to motivate the players in the supply chain to engage in CSR activity, we consider the revenue sharing contract. From the perspective of WTP differences, this paper studies CSR remanufacturing, which has certain influences on the sustainable development of the economy.

scholarly journals The Influence of Buyer Power on Supply Chain Pricing with Downstream Competition

2019 ◽  
Vol 11 (10) ◽  
pp. 2924
Author(s):  
Qiu Zhao
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Consumer Welfare ◽  
Retail Price ◽  
Retail Market ◽  
Pricing Decisions ◽  
Buyer Power ◽  
Downstream Competition ◽  
The Impact ◽  
Vertical Market

This paper aims to investigate the impact of buyer power on the wholesale price and retail price of, in the case, downstream competition. Based on a summary of the competitive characteristics of China’s retail market, a model of a vertical market was constructed to examine the influence of buyer power on the pricing decisions of manufacturers and retailers, and to analyze the mechanism of price decisions. The results showed that the buyer power of national retailers reduced the wholesale price, but the impact on local retailers remained uncertain. Although increasing buyer power initially increased the local retailer’s wholesale price and caused the ‘waterbed effect’, we found that this effect reverted when the buyer power reached a point at which the ‘anti-waterbed effect’ appeared. The opposite was true of the retail price. However, buyer power reduced the average retail price, and consumer welfare improved.

Supply Chains and Segment Profitability: How Input Pricing Creates a Latent Cross-Segment Subsidy

2011 ◽  
Vol 86 (3) ◽  
pp. 805-824 ◽  
Author(s):  
Anil Arya ◽  
Brian Mittendorf
Keyword(s):  
Supply Chains ◽  
Wholesale Price ◽  
Value Added ◽  
Supply Side ◽  
Demand Side ◽  
Predatory Pricing ◽  
Contribution Margin ◽  
Relative Contribution ◽  
Brand Recognition ◽  
Downstream Reach

ABSTRACT: Recent years have seen an increased emphasis on developing more precise accounting measures of market- and customer-level profitability. By their very nature, such segment profitability measures may unwittingly neglect complementarities. Such complementarities have been widely recognized on the demand side due to brand recognition, predatory pricing, or interdependent products. We develop a model showing that important supply-side complementarities can also be prevalent. In particular, when a firm relies on a self-interested supplier for inputs used across multiple segments, the wholesale price it pays depends on the average profitability of its segments. Taking such interaction between upstream pricing and the firm’s downstream reach into account, the model shows that: (1) segment profit calculations can understate or overstate the value added by the segment depending on the segment’s relative contribution margin, and (2) the firm sometimes benefits from devoting resources to less profitable segments and perhaps even from serving seemingly unprofitable markets and/or customers.

scholarly journals The Economics of IPR Protection Policies

2006 ◽  
Vol 5 (3) ◽  
Author(s):  
Ricard Gil
Keyword(s):  
Consumer Surplus ◽  
Optimal Combination ◽  
Government Size ◽  
Supply Side ◽  
Demand Side ◽  
The Government ◽  
Ipr Protection

In this paper, I model competition between legal and pirate products. In this framework, the government affects competition through police spending and taxes on the legal products. Therefore, the government can choose the optimal combination of spending and taxes that fit better its goals. I show that governments focusing on eradicating piracy will use lower level of taxes and police spending than governments focused on maximizing consumption, consumer surplus, and welfare or government size. This result highlights the importance of demand side policies in the fight against piracy and challenges the traditional solo approach of supply side policies.

Seizing the Opportunity: Euroscepticism and Extremist Party Success in the Post-Maastricht Era

2012 ◽  
Vol 47 (4) ◽  
pp. 544-573 ◽  
Author(s):  
Renee L. Buhr
Keyword(s):  
European Union ◽  
Theoretical Model ◽  
Vote Share ◽  
Supply Side ◽  
Demand Side ◽  
Political Opportunity ◽  
Legislative Elections ◽  
Member States ◽  
Eu Member States ◽  
Eu Integration

AbstractCan extremist parties benefit from a backlash against European Union integration? A theoretical model that integrates demand-side, supply-side and political opportunity space explanations for extremist party success is used here in an effort to predict the conditions under which extremist parties may have utilized increased public discontent with EU integration to increase their vote share in national legislative elections. The plausibility of the model is then tested against the evidence in 14 EU member states from 1992 to 2006, with the use of matrices and political opportunity space maps. In the majority of the elections examined, extremist parties increased their vote share in circumstances fitting the theoretical model.

Application of a Tax to E-Commerce Deliveries in Barcelona

2021 ◽  
pp. 036119812110124
Author(s):  
Genís Majoral ◽  
Francesc Gasparín ◽  
Sergi Saurí
Keyword(s):  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Supply Side ◽  
Environmental Tax ◽  
Positive Outcomes ◽  
Demand Side ◽  
Benefit Analysis ◽  
Revenue Collection ◽  
Last Mile ◽  
The Impact

The number of e-commerce transactions is increasing worldwide. Deliveries of goods purchased online generate externalities throughout the whole supply chain and, particularly, the increasing concern about the last-mile distribution of goods. The escalating presence of vans in cities contributes to poor air quality, climate change, noise, and congestion. So far, the majority of solutions to address this issue are based on the supply side, such as electric vans, optimizing the routing and pick-up-points, and so forth. Even in other transport sectors, pricing solutions are well known, yet they have not been extended to e-commerce delivery. This paper aims to propose an environmental tax falling on the demand side and equaling the externalities from this activity. The analysis has been particularized for the case of Barcelona. A cost–benefit analysis to assess the impact of such a tax has been carried out. When revenue collection is reinvested in the logistics sector, and for subsidizing electric distribution vehicles, the results indicate that the levying of the tax can generate positive outcomes.

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