scholarly journals Equilibrium decisions on pricing and innovation that impact reference price dynamics

2021 ◽  
Vol 0 (0) ◽  
pp. 0
Author(s):  
Shaokun Tao ◽  
Xianjin Du ◽  
Suresh P. Sethi ◽  
Xiuli He ◽  
Yu Li
Keyword(s):  
Supply Chain ◽  
Steady State ◽  
Reference Price ◽  
Stackelberg Game ◽  
Interactive Effect ◽  
Wholesale Price ◽  
Retail Price ◽  
Price Ratio ◽  
Reference Prices ◽  
Consumer Memory

<p style='text-indent:20px;'>Previous studies have confirmed that reference prices play an essential role in consumer purchasing decisions, and some researchers have suggested that reference prices are positively influenced by innovation. Therefore, we construct an interactive effect of innovation and reference price to study their combined impact on supply chain decisions. We model a supply chain, where a manufacturer determines the innovation level and the wholesale price while the retailer controls the retail price, as a dynamic Stackelberg game. We show that the interactive effect causes the steady-state wholesale and retail prices to increase, thus motivating the manufacturer to increase innovation investment. We see that the retail price and the level of innovation increase in reference price effect whereas they decrease in consumer memory. The centralized firm has a higher steady-state innovation level and innovation/price ratio and lower steady-state retail price compared to the decentralized supply chain. Consumers also benefit from the interactive effect as well as from centralization. Finally, we use numerical analysis to demonstrate our results and offer some managerial implications.</p>

scholarly journals Strategic Analysis of the Pricing Mechanisms in an Online Book Supply Chain in the Presence of Reference Price Effects

2021 ◽  
Vol 16 (5) ◽  
pp. 1492-1516
Author(s):  
Wenhua Hou ◽  
Yuwen Zeng
Keyword(s):  
Supply Chain ◽  
Discount Rate ◽  
Reference Price ◽  
Stackelberg Game ◽  
Lower Boundary ◽  
Retail Price ◽  
Reference Points ◽  
Price Effects ◽  
Retail Prices ◽  
Online Book

(1) Background: A binding recommended retail price has been used in several markets in a variety of forms, and the book market is a typical example. Publishers sell books to online retailers at a unit wholesale discount computed on the cover price. Retailers are then allowed to set the retail price. Therefore, if consumers regard the cover prices as reference points, then they may be more likely to purchase books if retail prices are lower than the cover prices. (2) Methods: We develop a Stackelberg game model for a book supply chain to investigates how reference price effects affect retailers and publisher’s pricing strategies. (3) Results: The results show that retailers will sell printed books at a discount only when the publisher’s wholesale discount rate is not high. Further, as the intensity of the reference price effects increases, (a) the lower boundary of the wholesale discount rate rises, (b) publishers’ profits increase and (c) retailers’ profits increase relative to the level of consumers’ e-books acceptance. (4) Conclusions: This result is related to the fact that the online retailer, such as Amazon and JD.com, like to invoke reference price effects in consumers’ minds by highlighting the printed book’s discount rate.

Decision Models of Supply Chain Under Asymmetric Information with Demand Disruption

2010 ◽  
Vol 143-144 ◽  
pp. 773-781
Author(s):  
Xin Rong Jiang ◽  
Yong Chao Li
Keyword(s):  
Supply Chain ◽  
Asymmetric Information ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Retail Price ◽  
Expected Profit ◽  
Decision Models ◽  
Market Demand ◽  
Optimal Production ◽  
Production Quantity

This paper studied the influence of asymmetric information and demand disruption on the decision of the supply chain. We analyzed the supply chain decision models based on a Stackelberg game under normal circumstances and demand disruption situation. The conclusion indicates when the market demand is disrupted, the optimal wholesale price, the retail price, the supplier’s expected profit and the supply chain system’s expected profit change in the same direction as the demand disruption, while the optimal production quantity and the retailer’s profit both have certain robustness under disruption. Finally we gave a numerical example to illustrate our analysis.

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.

A Strategic Analysis of Mixed Channel Structure

2015 ◽  
Vol 2 (1) ◽  
pp. 39-59 ◽  
Author(s):  
Xiaowei Linda Zhu ◽  
Xingxing Zu ◽  
Lei Zhu ◽  
Huafan Ma
Keyword(s):  
Supply Chain ◽  
Business Model ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Value Added ◽  
Optimal Strategies ◽  
Retail Store ◽  
Retail Price ◽  
Channel Structure ◽  
Online Store

In order to meet the needs of different customer segments, manufacturers use multiple distribution channels. This paper will examine two of the most common types of multi-channel structures. Under Structure 1, a supply chain includes a manufacturer, its online store and its own retail store, like GAP's business model. A profit maximization model is used to obtain optimal strategies in terms of optimal retail price and level of value-added services provided by manufacturer-owned retailer. Under Structure 2, a supply chain includes a manufacturer, its online store and an independent retail store, like Dell's business model. Stackelberg game is applied to obtain the optimal retail price, wholesale price, and level of value-added services provided by an independent retailer. Furthermore, comparisons between these two business structures are discussed and managerial guidelines are proposed. Finally, numerical examples are provided and real business examples are discussed to illustrate and justify the theoretical results.

scholarly journals Myopic versus Far-Sighted Behaviors in Dynamic Supply Chain Coordination through Advertising with Reference Price Effect

2017 ◽  
Vol 2017 ◽  
pp. 1-15 ◽  
Author(s):  
Yafei Zu ◽  
Lianghua Chen
Keyword(s):  
Supply Chain ◽  
Reference Price ◽  
Stackelberg Game ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Pricing Strategies ◽  
Market Demand ◽  
Price Effect ◽  
Theoretical Support ◽  
Behavior Choice

To better understand the different effects of the myopic and far-sighted behaviors on the advertising coordination in dynamic supply chain, this paper takes the reference price effect into consideration and formulates four differential game models for the two-level supply chain composed of a manufacturer and a retailer in the situation of Stackelberg game. In our models, the market demand is assumed to be affected by the goodwill, reference price, and the advertising investment, in which the advertising investment can promote the construction of goodwill and such goodwill can further enhance the reference price. The results show that the participating members in the supply chain should invest more in advertisement to improve the goodwill and the relative reference price reflected in the minds of consumers. A far-sighted manufacturer will invest more in the advertisement and charge a higher wholesale price regardless of the behavior choice of the retailer. However, such kind of ignorance leads to different results on the retail pricing strategies of the retailer. The numerical analyses are given in the end to verify the effectiveness of the conclusions which provide the theoretical support to the dynamic supply chain coordination in practice.

Supply Chain Decisions Considering Heterogeneous Consumer Greenness Preference and Reservation Utilities

2019 ◽  
Vol 12 (1) ◽  
pp. 1-21 ◽  
Author(s):  
YuHang Zhang ◽  
Ying Wang
Keyword(s):  
Supply Chain ◽  
Willingness To Pay ◽  
Bargaining Power ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Retail Price ◽  
Game Model ◽  
Dimensional Model ◽  
The Common ◽  
Reservation Utility

This article focuses on how the prices set by supply chains and the product greenness level changes when there exists a difference for consumers in both their greenness preference and their reservation utility for the common product with minimal greenness, based on a two-dimensional model which is built and the market is partitioned into four groups. In this study, the authors use the Stackelberg game model to analyze the decisions of a two-stage supply chain, providing environmentally friendly products affected by a consumer greenness preference which is represented by the willingness-to-pay (WTP) for product greenness. The authors found that manufacturers may lower the product greenness level with the decrease of the valuation of consumer's WTP for product greenness, but he may prefer keeping the same product greenness, he will even improve it, when there is a reduction in reservation utility for the traditional product. Moreover, this article shows that there is different impact for different combinations of both WTP for product greenness and product greenness level (different market segmentations) on price decisions of the manufacturer and retailer. In consideration of the asymmetric information about consumer's utility and willingness to pay between manufacturer and retailer, the authors introduce the bargaining power into the study, and then they conclude that during the different market segmentations, the wholesale price and retail price go down as a retailer strengthens his bargaining power, and increasing sales volume can improve profit to make up for a loss in retail price.

scholarly journals Pricing, Green Degree and Coordination Decisions in a Green Supply Chain with Loss Aversion

Mathematics ◽  
2019 ◽  
Vol 7 (3) ◽  
pp. 239 ◽  
Author(s):  
Zhongwei Feng ◽  
Chunqiao Tan
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Loss Aversion ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Subgame Perfect Equilibrium ◽  
Retail Price ◽  
Green Supply Chain ◽  
Efficiency Coefficient ◽  
Decentralized Decision Making

The consumer environmental awareness promotes green manufacturing and the behavioral preferences of members become prevailing in supply chain management. To promote further development of green supply chains, a two-echelon green supply chain with a manufacturer and a retailer is considered, where the manufacturer is loss-averse and the retailer is risk-neutral. We use a Stackelberg game to investigate the impacts of loss aversion and green efficiency coefficient on retail price, wholesale price, green degree, profits of members, and profit of the green supply chain under the assumption that manufacturer’s reference point of loss aversion is equal to the subgame perfect equilibrium partition. It is shown that, in the centralized decision-making setting (CDS), green degree and profit of the green supply chain are higher than those in the decentralized decision-making setting (DDS), while in the decentralized decision-making setting with a loss-averse manufacturer (DDS-LAM) loss aversion of manufacturer further decreases green degree and profit of green supply chain. It is also found that profits of the manufacturer and the retailer decrease with levels of loss aversion of manufacturer. Furthermore, it is also shown that wholesale price and retail price in the three decision-making settings depend on the green efficiency coefficient. Wholesale price and retail price in DDS-LAM are always the lowest (highest) if the green efficiency coefficient is sufficiently high (low). Finally, executing a greening cost-sharing contract can improve chain members’ profits if the retailer shares an appropriate proportion with the loss-averse manufacturer.

Revenue Sharing Contract of Green Supply Chain under Manufacturer Risk-Aversion

2014 ◽  
Vol 697 ◽  
pp. 482-487
Author(s):  
Shi Ying Jiang ◽  
Chun Yan Ma
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Risk Aversion ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Green Supply Chain ◽  
Game Model ◽  
Product Price ◽  
Revenue Sharing Contract

Background on two stages green supply chain consisting of a manufacturer and a retailer, considering the degree of risk aversion and product greenness, consumer preferences and other factors, the centralized decision-making game model and manufacturer-leading Stackelberg game model are established.Then two game models are compared. The interaction of product greenness, wholesale price, product price,and risk aversion utility for manufacturers and retailers are also disscussed. Finally, the revenue sharing contract is applied to coordinate the green supply chain . The results show that:(1) In the centralized decision-making model, there is a critical value of the product green degree; (2)In manufacturer-leading Stackelberg game model, the higher the green degree of the product, the higher the manufacturer's wholesale price,and the wholesale price increases as risk aversion degree of manufacturers improves;(3)The revenue sharing contract can coordinate this type of green supply chain under manufacturers risk-averse.

scholarly journals A Building-Material Supply Chain Sustainable Operations under Fairness Concerns and Reference Price Benefits

Complexity ◽  
2021 ◽  
Vol 2021 ◽  
pp. 1-14
Author(s):  
Huimin Xiao ◽  
Youlei Xu ◽  
Shiwei Li
Keyword(s):  
Supply Chain ◽  
Building Material ◽  
Cost Sharing ◽  
Reference Price ◽  
Dynamic Models ◽  
Stackelberg Game ◽  
Noncooperative Game ◽  
Sustainable Operations ◽  
Effort Level ◽  
Fairness Concerns

This paper incorporates fairness concerns and consumer reference price effects into a two-echelon building-material closed-loop supply chain consisting of a manufacturer and a retailer. By establishing four differential game models, we investigate the sustainable operations and cooperation of this supply chain. The four game models are a Nash noncooperative game, Stackelberg game with cost sharing, Stackelberg game with fairness concerns and cost sharing, and centralized decision model. By using dynamic models and optimal control theory, we obtain the two members’ optimal equilibrium strategies in the supply chain. Analytical results show that the consumer reference price effect has a positive impact on the manufacturer’s effort level, retailer’s publicity level, and product brand goodwill, which can improve the supply chain performance. The retailer’s partial commitment to cost sharing can enhance the production enthusiasm of the manufacturer, improve the brand reputation of the product, and enhance the two members’ individual profitability. The distributional fairness concerns of the manufacturer not only prevent the manufacturer and retailer from achieving Pareto improvement but also lead to the decline of the manufacturer’s effort level and profitability. The research conclusions of this paper can provide some insights into the cooperation and sustainable development of the supply chain.

Procedural fairness concerns in supply chain with retailer promotional effort

2018 ◽  
Vol 13 (2) ◽  
pp. 302-330 ◽  
Author(s):  
Tengfei Nie ◽  
Hualin Liu ◽  
Yilun Dong ◽  
Shaofu Du
Keyword(s):  
Supply Chain ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Procedural Fairness ◽  
Content Type ◽  
Promotional Effort ◽  
Fair Process ◽  
Slotting Allowances ◽  
Fairness Concerns ◽  
Distributional Fairness

Purpose The existing literature has a lack of modeling of procedural fairness concerns in the supply chain level. This paper aims to investigate how procedural fairness concerns affect channel decisions, performance and coordination. Design/methodology/approach This paper considers a supply chain consisting of one supplier and one retailer who have procedural fairness concerns in a classic Stackelberg game setting. The model is set in sales promotional environment. According to the existing literature, engagement is used to depict fair process. Some findings are made through analyzing respective decisions of the supplier and the retailer under the influence of procedural fairness concerns. Findings The results show that the channel efficiency can be improved when the retailer exhibits procedural fairness concerns, but if the aversion to unfair process exceeds a certain threshold, the retailer cannot benefit from it. Besides, the retailer profits more when he cares about distributional fairness, although the whole channel surplus can be improved by procedural fairness concerns. Originality/value This is the first paper to study the influences of procedural fairness concerns on supply chain decisions and channel performance. Finally, a mechanism combining a wholesale price contract with slotting allowances is proposed to coordinate the supply chain.

Sign in / Sign up

Export Citation Format

Share Document