scholarly journals Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers

2020 ◽  
Vol 2020 ◽  
pp. 1-15
Author(s):  
Hongmei Yang ◽  
Wei Wang
Keyword(s):  
Supply Chain ◽  
Price Discrimination ◽  
Information Acquisition ◽  
Wholesale Price ◽  
High Price ◽  
Price Sensitivity ◽  
Pricing Decisions ◽  
Price Increases ◽  
Retail Prices ◽  
Price Discriminate

Assuming the two retailers decide whether to acquire information to segment consumers and price them differently, we investigate the problem of information acquisition and third-degree price discrimination in the supply chain composed of one common manufacturer and duopoly retailers. We explore how the supply chain members’ pricing decisions are affected by the fraction of high price-sensitivity consumers and the consumers’ difference in price sensitivity. Analytical results show that the manufacturer’s wholesale price increases with the fraction of high price-sensitivity consumers and decreases with the consumers’ difference in price sensitivity. Moreover, if a retailer chooses to acquire information and price discriminate, the retail prices for two types of consumers increase with the fraction of high price-sensitivity consumers. However, the retail price for consumers with high (low) price sensitivity decreases (increases) with the consumers’ difference in terms of price sensitivity. By comparing the results among different information acquisition and price discrimination decisions, we find that there exist two possible equilibrium decisions for both retailers: both retailers acquire information and price discriminate and no retailer acquires information and each charges a uniform price for all consumers. The strategy which dominates depends on the fraction of high price-sensitivity consumers and the consumers’ difference in price sensitivity. However, compared with no retailer acquiring information, the manufacturer is better off when two retailers acquire information. Consequently, the manufacturer designs a fixed fee contract to stimulate retailers to price discriminate and to achieve a win-win situation for them finally.

Examining Double Marginalization Effect for Innovative Product Supply Chain

2012 ◽  
Vol 3 (1) ◽  
pp. 37-52 ◽  
Author(s):  
Wenjing Shen
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Limited Attention ◽  
Innovative Product ◽  
Double Marginalization ◽  
Pricing Decisions ◽  
Number Of Factors ◽  
Innovative Products ◽  
Retail Prices ◽  
Over Time

Double marginalization effect refers to the phenomenon that when both upstream and downstream firms have monopolistic power, customers pay higher retail price and firms make less profit than when the supply chain is vertically integrated (Tirole, 1988). Although double marginalization effect has been extensively studied in the context of supply chain management for mature products, very limited attention has been given to innovative products whose demand is generated through word-of-mouth effect. The authors study the pricing decisions in a supply chain that sells innovative products. Using a modified Bass diffusion model to capture demand trajectory over time, the authors identify the optimal way for the retailer and supplier to adjust prices when profit is not discounted, and also provide numerical examples when profit is discounted. The authors show that (1) when profit is not discounted the optimal retail prices are adjusted over time, while the optimal wholesale price should be kept as a constant, and (2) double marginalization effect also exists in an innovative product supply chain, but its degree depends on a number of factors, such as the innovation and imitation coefficients.

scholarly journals Competitive pricing strategies of multi channel supply chain under direct servicing by the manufacturer

2020 ◽  
Author(s):  
Amit Sarkar ◽  
Brojeswar Pal
Keyword(s):  
Supply Chain ◽  
Strategic Alliance ◽  
Wholesale Price ◽  
Optimum Level ◽  
Selling Price ◽  
Positive Effects ◽  
Pricing Decisions ◽  
The People ◽  
Demand Rate ◽  
Competitive Pricing

Internet and its accessible devices (e.g., mobiles, computers) are the unmitigated blessings to the people. Nowadays, internet connectivity almost eliminates all kinds of blockades for the verification of authentication, comparison of prices, and services for a product. Consequently, the market has been becoming more competitive compared to decision making.  In this paper, we construct a multi-channel supply chain (MCSC) frameworks with traditional channels as well as a direct channel (DC), where the manufacturer provides services to the customers for both the cases. Then the optimal decisions of the manufacturer and the retailers are examined. The optimal pricing decisions and services are discussed and also compared the profits with one another under various cases (Stackelberg Settings, Strategic Alliance, and two types of NO Improved Service). Then the sensitivity of the service cost coefficients and the cross-channel price coefficients on the profits for each player and the supply chain is analyzed. We find out the best profitable strategies under the parameters such as service costs and the positive effects of the service on the demand rate. We also mark out the optimum level of the services so that the profit will be maximized for each player. Finally, we define an interval such that if the service costs belong to that interval, then the selling price of the DC would be lesser than the wholesale price. These findings help companies such as automobiles, electronic goods, etc. to implement the best strategies to increase their profit.

scholarly journals Emergency Strategies of Closed-Loop Supply Chain with Single Retailer Recycling under Demand Disruptions

2020 ◽  
Vol 2020 ◽  
pp. 1-19
Author(s):  
Jian Cao ◽  
Yuting Yan ◽  
Lingyuan Wang ◽  
Xihui Chen ◽  
Xuemei Zhang ◽  
...  
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Closed Loop ◽  
Wholesale Price ◽  
Normal Operation ◽  
Market Demand ◽  
Closed Loop Supply Chain ◽  
Decentralized Decision Making ◽  
Retail Prices ◽  
Emergency Decision

The uncertainty caused by emergencies will influence the normal operation of the supply chain. Considering demand disruptions, a closed-loop supply chain consisting of one manufacturer and two competing retailers based on decentralized decision-making is considered. In the supply chain, one retailer recovers end-of-life products while the other does not. Analytic results show that, when the disturbance of demand occurs, the manufacturer and retailers adjust the wholesale price and retail prices of products according to the direction of the market demand disruptions. Under demand disruptions, the retailer who participates in recovering can gain more profits, especially in the case of the positive disruption. Theoretic and pragmatic references for the emergency decision-making of closed-loop supply chain enterprises are provided.

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.

scholarly journals Inventory and Pricing Decisions Under Wholesale Price Contract with Social Preferences

2016 ◽  
Vol 4 (1) ◽  
pp. 68-86 ◽  
Author(s):  
Shuren Liu ◽  
Huina Chen ◽  
Lili Chen
Keyword(s):  
Supply Chain ◽  
Social Preferences ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Price Setting ◽  
Order Quantity ◽  
Pricing Decisions ◽  
Other Regarding ◽  
The Impact ◽  
Other Regarding Preferences

AbstractThis paper introduces the other-regarding preferences coefficients and studies the impact of social preferences on supply chain performance in the price-setting newsvendor setting. It is assumed that the stochastic demand is multiplicative. The manufacturer and retailer play a Stackelberg game. We analyze the impact of the decision-maker’s social preferences on the manufacturer’s optimal wholesale price, the retailer’s optimal retail price and order quantity, the supply chain member’s profits and utilities, and the supply chain system’s profits and utilities under three different cases that only the retailer, only the manufacturer and both are with social preferences. We show that a manufacturer, as a leader, should find a spiteful retailer, while a retailer, as a follower, should find a manufacturer with generous liability, to improve the entire supply chain. Finally, numerical examples are given to illustrate these results.

Pricing and Distribution Strategies in a Dual-Channel Supply Chain

2020 ◽  
Vol 13 (3) ◽  
pp. 23-37
Author(s):  
Guangye Xu ◽  
Hanguang Qiu
Keyword(s):  
Supply Chain ◽  
Price Competition ◽  
Wholesale Price ◽  
Theory Model ◽  
Distribution Strategy ◽  
Pricing Decisions ◽  
Dual Channel ◽  
Brick And Mortar ◽  
Dual Channel Supply Chain ◽  
New Distribution

Internet has revolutionized distribution channels. Online orders are forwarded to the brick-and-mortar store to make the fulfillment, which is a new distribution strategy in a dual-channel supply chain. However, there is little research on the value of using such distribution strategy in dual-channel setting. To fill this gap, this article considers a manufacturer marketing a product through a dual-channel supply chain, comprised of an online channel and an offline retail channel. We develop a game theory model to investigate the pricing decisions and the distribution strategies, as well as to examine the impacts of the new distribution strategy on price competition and the dual-channel supply chain member's profits. By comparing the results of the traditional distribution strategy and the new distribution strategy, we find that the new distribution strategy can soften price competition when the proportion of the revenue generated by the direct channel is high enough, while if the proportion is low enough, it may intensify price competition. We also find that the supply chain members can achieve a win-win situation when the wholesale price is higher, and the proportion is greater under the new distribution strategy.

Impact of wholesale price discrimination by the manufacturer on the profit of supply chain members

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rofin TM ◽  
Biswajit Mahanty
Keyword(s):  
Supply Chain ◽  
Price Discrimination ◽  
Wholesale Price ◽  
Price Strategy ◽  
Content Type ◽  
Dual Channel ◽  
Channel Preference ◽  
Online Channel ◽  
Dual Channel Supply Chain ◽  
The Impact

PurposeThe purpose of this paper is to investigate the impact of wholesale price discrimination by a manufacturer in a retailer–e-tailer dual-channel supply chain for different product categories based on their online channel preference.Design/methodology/approachThis paper considers a dual-channel supply chain comprising of a retailer and an e-tailer engaged in competition. Game-theoretic models are developed to model the competition between the retailer and e-tailer and to derive their optimal price, optimal order quantity and optimal profit under (1) equal wholesale price strategy and (2) discriminatory wholesale price strategy. Further, a numerical example was employed to quantify the results and to capture the variation with respect to online channel preference of the product.FindingsIt is beneficial for the manufacturer to adopt a discriminatory wholesale price strategy for products having both high online channel preference and low online channel preference. However, equal wholesale price strategy is beneficial for the e-tailer and the retailer in the case of products having high online channel preference and in the case of products having low online channel preference, respectively.Practical implicationsThe study helps the manufacturers to maximize their profit by adopting the right wholesale price strategy considering the online channel preference of the product when the manufacturers are supplying to heterogeneous retailers.Originality/valueThere is scant literature on the wholesale price strategy of the manufacturer considering the heterogeneous downstream retailers. This paper contributes the literature by bridging this gap. In addition, the study establishes a link between the wholesale price strategy and online channel preference of the product.

scholarly journals Pricing and Allotment in a Sea-Cargo Supply Chain with Reference Effect: A Dynamic Game Approach

2013 ◽  
Vol 2013 ◽  
pp. 1-10 ◽  
Author(s):  
Lei Xu ◽  
Govindan Kannan ◽  
Xiaoli Yang ◽  
Jian Li ◽  
Xiukun Zhao
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Closed Form Solution ◽  
Dynamic Game ◽  
Spot Market ◽  
Form Solution ◽  
Purchasing Decisions ◽  
Purchasing Decision ◽  
Pricing Decisions

The contract between the carrier and forwarder is a long-term issue, and the repeated contract business makes the forwarder develop a reference point based on the contract prices, and this reference effect, to a large extent, affects the forwarder’s contract purchasing decisions. Based on that, this paper introduces the reference effect in the sea-cargo supply chain and studies a multiple-period contract problem between the carrier and the forwarder. It is found that when the capacity price in the spot market is less than the forwarder’s willingness-to-pay, the forwarder’s contract purchasing decision is not affected by the reference effect, only by the capacity price in the spot market, and the multiple-period contract problem can be simplified into a single-period game. In addition, the carrier’s optimal contract wholesale price approaches the capacity price in the spot market. Although, the forwarder’s contract purchasing decision depends upon the reference effect, it is difficult to derive the closed-form solution. Moreover, because of the risk in the spot market, the carrier tends to sell his/her capacity in the contract market. Finally, we employ the numerical simulation to study the carrier’s contract pricing decisions and the forwarder’s capacity purchasing decisions in two cases.

scholarly journals Risk-Averse Pricing Decisions Related to Recyclables’ Quality in a Closed-Loop Supply Chain

2021 ◽  
Vol 2021 ◽  
pp. 1-16
Author(s):  
Qunxiang Zhang ◽  
Zuqing Huang ◽  
Rong Zheng
Keyword(s):  
Supply Chain ◽  
Closed Loop ◽  
Consumer Preference ◽  
Third Party ◽  
Risk Averse ◽  
Manufacturing Costs ◽  
Closed Loop Supply Chain ◽  
Pricing Decisions ◽  
Retail Prices ◽  
Preference Coefficient

In a closed-loop supply chain, uncertainty of recyclables’ quality is a major factor of supply chain members’ decision-making. Because of this uncertainty, manufacturers must pay varying manufacturing costs for remanufacturing recyclables. Our study assumed that manufacturers are risk-averse towards uncertainty in manufacturing costs and constructed a retailer recycling model and a third-party recycling model to investigate pricing decisions in a decentralized closed-loop supply chain under uncertainty about recyclables’ quality. Our findings can be summarized as follows: (1) the higher the degree of consumer preference for remanufactured products, the higher the wholesale and retail prices of remanufactured products and the higher the recycling price of used products; (2) the two recycling models showed a U-shaped relationship between supply chain revenue and the degree of consumer preference for remanufactured products, and this supply chain revenue is related to the consumer preference coefficient; (3) there is a U-shaped relationship between the retailer’s expected revenue and the degree of consumer preference for remanufactured products in the R mode and an M-shaped relationship between them in the 3P mode; (4) in both recycling modes, the manufacturer’s risk aversion is inversely proportional to supply chain revenue, and supply chain revenue in the R mode is higher than that in the 3P mode; and (5) the higher the uncertainty of recyclables’ quality, the lower the recycling price of used products and the lower the manufacturer’s enthusiasm for recycling or for used products.

scholarly journals Two-price policy for a newsvendor product supply chain with time and price sensitive demand

2021 ◽  
Author(s):  
Omid Jadidi
Keyword(s):  
Supply Chain ◽  
Life Cycle ◽  
Product Life Cycle ◽  
Wholesale Price ◽  
New Product ◽  
Price Policy ◽  
Retail Price ◽  
Price Sensitivity ◽  
Market Demand ◽  
Product Life

In this study, a dominant manufacturer wholesales a technological product to a retailer. In technology-related industries, the obsolescence of an existing product and/or the appearance of a new product decrease the attractiveness of the existing product. This study also assumes that the market demand is stochastic and price-sensitive, where this price-sensitivity increases by time. Hence, retailers need to decline the retail price during the product life cycle to alleviate the effect of time on the demand. Here, two models/cases are considered. In the first model, the retailer decreases the retail price at midlife without any compensation from the manufacturer. In the second model, the manufacturer gives rebate to the retailer when the retailer declines the retail price at midlife. In addition, the performance of the proposed models is numerically compared with wholesale-price-only and the buyback policies.

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