Impact of extended warranty service on product pricing in online direct retailers' competitive market

Junhai Ma, Fengshan Si, Qin Zhang and Zongxian Wang

Energy Economics, 2024, vol. 129, issue C

Abstract: In this paper, we consider a model composed of the three largest online direct retailers to investigate the impact of extended warranty service on product pricing. A single-period static game model and a dynamic game model with two delays are built. We discuss the optimal game strategies and dynamic evolution game behaviors of retailers and analyze the effects of warranty period and price adjustment speed on system stability. The result shows that the optimal extended warranty price, green degree, and extended warranty period lead to the biggest profits for the retailer. From the perspective of maximum profit, retailers should give priority to extending the warranty period, followed by extending the warranty price and extending the green degree of warranty. For the sake of system stability and player performance, retailers should take recent historical data as a reference, and a relatively slow price adjustment speed is needed. To better maintain the stability of the system, the delay feedback control method is adopted which can successfully control the instability of the system.

Keywords: Complexity theory; Online direct retailers; Extend warranty service; Quality warranty period; chaos control (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:129:y:2024:i:c:s0140988323007156

DOI: 10.1016/j.eneco.2023.107217

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