Implications of Price Matching in Supply Chain Negotiation

Problem definition: Few papers have explored the impact of price matching negotiation (PM), in which a channel matches its price with the resulting wholesale price bargained by another channel, on firms’ performances, consumer welfare, and social welfare, with and without supply chain coordination. Academic/practical relevance: Negotiation has been widely seen in determining both uniform and discriminatory wholesale prices, which affect outcomes of competitive supply chain practices. Methodology: To characterize the PM mechanism, we use game theory and Nash bargaining theory to compare PM with simultaneous negotiation (SN) through a common-seller two-buyer differentiated Bertrand competition model. Results: Our analysis reveals that PM can benefit the seller but hurt all buyers, which is at odds with some fair wholesale pricing clauses intending to protect buyers. Under coordination with side payments, however, all firms can conditionally benefit more from PM than from SN. Despite firms’ gains, PM leads to less consumer utility and social welfare compared with SN, unless the second buyer in PM is considerably less powerful than the first buyer. Coordination further worsens PM’s negative impact on consumer utility and social welfare. Moreover, the existence of a spot market can increase the wholesale price in PM, hurting buyers, consumers, and society. Furthermore, the qualitative results about PM remain robust under an alternative disagreement point for PM, multiple buyers, and other extensions. Managerial implications: This paper delivers insights on when price matching in supply chain wholesale price negotiation can benefit a seller, buyers, consumers, and society in a variety of scenarios. It advocates how managers can use PM to their own advantages and provides rationale to decision makers for policy regulations regarding wholesale pricing.

Pricing in Abundance

Small island nations that have relied on satellites for international connectivity are now being connected by submarine cables that have infinitely more capacity. The hope is that these cables will lift the social and economic development of the economies connected. This hope is more likely to be realized with the adoption of wholesale traffic pricing based on the capacity abundance brought by the cable system rather than historical wholesale bandwidth pricing, which assumes capacity scarcity. Reductions in the wholesale cost of international connectivity are more likely to be passed on to end users if there is retail competition. The proposed wholesale pricing model facilitates increased retail competition. These ideas are explored in a case study of the Cook Islands, which is a member of the Manatua Cable Project.

CHARACTERISTICS OF THE GREEN SUPPLY CHAIN COORDINATION: THEORETICAL CONTRIBUTION TO USE THE WHOLESALE PRICING CONTRACT IN THE GREEN SUPPLY CHAIN

Because of the eco-consciousness and the environmental protection companies become ’green’, therefore many green supply chains are realized in the business sphere. Companies of green supply chain take care on the environmental protection. These companies try to decrease the pollution, so they implement some eco-conscious processes. The green supply chains contain these companies. The biggest problem is the coordination of these chains. Nowadays, supply chains have many members, so the cooperation is getting more and more difficult. It could be a potential good solution, if the chain members use the different contract types to coordinate the chain. Contract tries to handle the inequality between the chain members and gives a framework to the cooperation of chain members. This paper introduces the wholesale pricing contract, which can be used in the case of green supply chain and its different settings effectively. The wholesale pricing contract is one of the traditional contract types but it produces different performance in the case of centralized and decentralized setting. Centralized setting has a chain leader – this member operates and coordinates the whole chain and defines common goals for the members. In decentralized setting the members define their own goals and they act in accordance with their own interest. A simulation with numerical example is also included to represent the difference between the two settings.

Dynamic vs. Static Wholesale Pricing Strategies in a Dual-Channel Green Supply Chain

With the improvement of social environmental awareness, the dual-channel green product sales mode has been widely used by many manufacturing firms. In this paper, we consider a dual-channel green supply chain where one manufacturer produces a green product and sells it through one retail channel and its own direct channel. Consumers in the two channels have different perceptions of the product energy efficiency level due to different purchasing experiences. The product energy efficiency level evolves over time and is characterized as a dynamic variable. By developing and solving the Stackelberg differential game problems under the dynamic and static wholesale pricing strategies, respectively, we obtain the main results in this paper. First, the manufacturer has more incentives to invest in green innovation when more consumers buy the green product through the direct channel. Second, the manufacturer prefers to adopt the dynamic wholesale pricing strategy in most cases and prefers the static one only when the consumers in both channels have relatively high energy efficiency perceptions. By introducing the transfer payment contract, we show that the static wholesale pricing strategy may be the better choice, which leads to a win-win outcome for both members. Finally, sensitivity analysis further provides some managerial insights and verifies the robustness of the results.

Affordable retail pricing on the NBN

The National Broadband Network (NBN) has the potential to transform economic and social relations. But realising that potential requires universal take-up and significant utilisation of the NBN. This paper examines how NBN wholesale pricing can help to do this. It introduces a mark-up concept to build a bridge between wholesale and retail prices, provides a yard-stick for how we might define affordable retail pricing and suggests how an entry level wholesale price can be specified to deliver that and enable low income customers to access the NBN.