A Subgame Perfect Approach to a Multi-Period Stackelberg Game with Dynamic, Price-Dependent, Distributional-Robust Demand

Mahnaz Fakhrabadi () and Leif Sandal ()
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Mahnaz Fakhrabadi: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway, https://www.nhh.no/en/employees/faculty/mahnaz-fakhrabadi/

No 2023/4, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: This paper investigates a multi-periodic channel optimization facing uncertain, price dependent, and dynamic demand. The picture of the market uncertainty is incomplete, and only the price and time-dependent mean and standard deviation are known and may depend on the price history. The actual demand distribution itself is unknown as is typically the case in real world problems. An algorithm finding the optimized decentralized channel equilibrium is developed when the downstream member optimizes her expected profit stream by a distributional-robust approach, and the upstream member (leader) considers it as the follower’s reaction function. The algorithm allows for strategic decisions whereby the current demand is scaled by the previous price setting.

Keywords: Multi-Periodic problem; Stochasticity; Stackelberg Game; Subgame Perfect Distributional-Robust Approach; Supply Chain Management; Price-History Dependent Dynamic Demand (search for similar items in EconPapers)
JEL-codes: C61 C62 C63 C72 C73 D81 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2023-03-22
New Economics Papers: this item is included in nep-com, nep-des, nep-gth, nep-ind and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:nhhfms:2023_004

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