Strategy Analysis of Selling Model Selection in Vertical Competition Supply Chains: A Game Theoretic Model

This paper takes the supply chain perspective to study the choice of selling model for manufacturers and e-tailers. To accomplish our objective, we consider three selling models, including reselling, agency selling, and mixed selling. By comparing and analyzing the equilibrium outcomes of the three selling models, we obtain some beneficial results. These results show that manufacturers and e-tailers cannot manage to make a profit at the same time whether they choose the reselling model or agency selling model. Our results also show that the mixed selling model may improve supply chain performance, as long as the cross-price elasticity is not low. Especially when the cross-price elasticity is comparatively high, a manufacturer and an e-tailer in vertical competition can achieve a profit-Pareto-improving situation, regardless of the market share of the e-tailer.

2. Markets

‘Markets’ examines markets, looking at demand and supply. The demand curve provides information on how the demand for a given product changes with its price, while the supply curve illustrates the correlation between the product price and quantity available for a given period. The meeting point between the two, in a competitive market, represents the market price. The market price is affected, among other things, by the nature of the product in question, by the availability and price of substitutions (cross-price elasticity), by changing consumer needs and preferences, by innovation, and by consumers’ level of income. There are two types of markets relevant here: the product market and the geographical market.

Impact of Revised Time of Use Tariff on Variable Renewable Energy Curtailment on Jeju Island

Jeju Island announced the “Carbon Free Island (CFI) Plan by 2030” in 2012. This plan aims to replace conventional generators with distributed energy resources (DERs) up to a level of 70% by 2030. Akin to Jeju Island, as DERs have been expanded in islanded power systems, variable renewable energy (VRE) has become a significant component of DERs. However, VRE curtailment can occur to meet power balance, and VRE curtailment generally causes energy waste and low efficiency, so it should be minimized. This paper first presents a systematic procedure for estimating the annual VRE curtailment for the stable operation of the islanded power systems. In this procedure, the VRE curtailment is estimated based on the power demand, the grid interconnection, the capacity factor of VRE, and conventional generators in the base year. Next, through the analysis of the hourly net load profile for the year in which the VRE curtailment is expected to occur, a procedure was proposed to find the season and hour when VRE curtailment occurs the most. It could be applied to revised Time-of-Use (ToU) tariff rates as the most cost-effective mitigation method of VRE curtailment on the retail market-side. Finally, price elasticity of electricity demand was presented for applying the revised ToU tariff rate scenarios in a specific season and hour, which found that VRE curtailment occurred the most. Considering self- and cross-price elasticity of electricity, revised ToU tariff rate scenarios were used in a case study on Jeju Island. Eventually, it was confirmed that VRE curtailment could be mitigated when the revised ToU tariff rates were applied, considering the price elasticity of demand.

Impact of Strategic Cooperation under Competition on Green Product Manufacturing

This study explores the optimal pricing and investment decision for two competing green supply chains, both consisting of a manufacturer and an exclusive retailer. Our focus is to explore, does the strategic integration decision with rivals at the horizontal level or with partners at the vertical level have any effect on green product types? The results reveal the following insights: retailer-retailer strategic integration at downstream level leads to a sub-optimal total supply chain profit and green quality level for a development-intensive green product. Two competing manufacturers can produce products at a higher level if they are vertically integrated with respective retailers. Manufacturer-manufacturer integration at upstream level sometimes leads to higher profits and product quality level if cross price-elasticity of consumers is high. However, an opposite phenomenon is observed while they are selling for a marginal-intensive green product, horizontal integration can improve green quality levels, but supply chain members will receive a lower profit. Therefore, selection of green product types and strategic integration decision are interrelated to achieve the profit maximization goal along with the aim to offer products at a higher green quality level. Vertical integration strategy can outperform horizontal integration strategy, especially if cross-price elastic for green products remain high.

An Analysis of the Cost Structure of Food Industries in Pakistan: An Application of the Translog Cost Function

Given the importance of food industriesin Pakistan, this studyanalyzestheircost structure by estimating thetranscendental logarithmic cost function. The study also considers elasticity of substitution along with own-price elasticity and cross-price elasticity. Four factor inputs,i.e.,labor, capital, energy,and materials,are used toestimatethe cost function. The results indicate that materialsaccount for the highest share of the cost. The elasticity of substitution of materialsfor capital and energy is also weak. The own-price elasticities indicate that the demand for materialsis least responsive to a change in its own price while the demand for other inputs varies with price. The cross-priceelasticities show that labor, capital and energy are substitutes foreach other. The output elasticity of cost demonstrates the presence of economies of scale.

Estimating the Demand Elasticity of Rice in Bangladesh: An Application of the AIDS Model

This study determines the causes of consumption, compensated, and uncompensated demand for rice using the Linear Approximate Almost Ideal Demand System (LA-AIDS) model in Bangladesh. The model was used along with the corrected Stone Price Index. The study’s findings showed that the income elasticity of demand for rice was only 0.76, indicating that rice is a normal and necessary food item. The own-price elasticity (compensated and uncompensated) showed that all food items were price inelastic. The rice’s own-price elasticity demonstrated that if the price falls by 10%, rice demand will rise by 8.21%. This cross-price elasticity showed the weak substitution effects of a price change. Therefore, price interference may not lead to a substantial effect on food demand.

Designing Buy-Online-and-Pick-Up-in-Store (BOPS) Contract of Dual-Channel Low-Carbon Supply Chain considering Consumers’ Low-Carbon Preference

Nowadays, buy-online-and-pick-up-in-store (BOPS) is a popular sales project to promote product sales. Implementing BOPS in the dual-channel low-carbon supply chain (DLSC) can not only improve low-carbon manufacturers’ profit but also reduce energy consumption in it. This paper focuses on how to design the contract which can ensure the implementation of BOPS in the DLSC consisting of one manufacturer and one retailer considering consumers’ low-carbon preference. Based on the analysis of game theory, two kinds of BOPS contract (MW contract with the dominant manufacturer making decision on wholesale price and RW contract with the dominant retailer making decision on wholesale price) with fixed compensation are designed and compared to obtain the better contract which is more effective on the implementation of BOPS. The findings show that MW contract is better than RW contract for the DLSC to implement BOPS. When consumers’ low-carbon preference and BOPS preference and the anti-cross-price elasticity are high enough, the DLSC can implement BOPS under the MW contract because it has Pareto efficiency on the profit of the original DLSC. We further find the sales price is decreasing in consumers’ low-carbon preference and anti-cross-price elasticity, while the wholesale price is increasing in consumers’ low-carbon preference. Finally, the results are verified by numerical examples.

An Economic Analysis of Food Demand in Rural and Urban Households of Tamil Nadu

Food is a basic part of our existence and nourishes the body. The Indian consumer underwent a remarkable transformation in their consumption pattern. Food consumption and expenditure on different commodities is an important area of research for economists. The NSSO data (68th round) was used to derive different demand elasticity for different food groups in Tamil Nadu. The income elasticity derived from the Quadratic Almost Ideal Demand System model revealed that the food group, milk and vegetables are necessary goods in rural households but luxury goods in urban households. The meat was necessary good in urban households but luxury goods in rural households. The uncompensated own price elasticity showed the demand reacted elastically to own price changes for meat, edible oils, and nuts in rural households, milk, egg, vegetables, fruits, nuts and oil in urban households. The uncompensated cross-price elasticity showed milk and beverages were substitutes in both rural and urban households. Similarly, meat and egg in rural, milk and egg, fruits and nuts in urban households were substitutes. The compensated own price elasticity showed nuts and oil in rural and urban households, meat in rural and milk, egg, vegetables and fruits in urban households, were elastic to the price change. The compensated cross-price elasticity showed, fruits, and nuts, egg and meat, meat and fish, appeared to be moderately strong substitutes, cereals and vegetables were complements in rural households, whereas vegetables and edible oils, fruits and vegetables, were substitutes, the commodity group’s fruits and nuts, milk, and egg, were complements in urban households of Tamil Nadu. The study recommended policies such as appropriate technology development to enhance the productivity of oilseeds and meticulous planning of the quantum of edible oil to be imported and rationalization of distribution of edible oils through Public Distribution System, exclusively to the households living under the poverty line to meet the growing demand for edible oil.

Estimating Natural Gas Demand Elasticities in Nigeria

This study estimated natural gas demand elasticities in Nigeria. The objective of the study was to examine the responsiveness of natural gas demand to changes in price of natural gas, income and prices of other energy products. The study adopted the bound testing approach to cointegration within the framework of ARDL to estimate annual time series data over a period of 33 years (1984 – 2016). The findings of this research showed that the elasticity of natural gas demand is relatively price inelastic in both short and long run; cross-price elasticity of gas demand revealed that AGO and LNG are substitute energy products for natural gas in Nigeria; while the estimate of income elasticity of demand is not statistically significant in the short and long run.