Price promotion with reference price effects in supply chain

Zhibing Lin

Transportation Research Part E: Logistics and Transportation Review, 2016, vol. 85, issue C, 52-68

Abstract: We consider the price promotion in a supply chain comprising one manufacturer and one retailer, who take into account the reference price effects of consumers. The problem is analyzed as a manufacturer-lead Stackelberg game. The results indicate that reference price effects could mitigate “double marginalization” effects, and improve the channel efficiency. We also show that the optimal price promotion benefits the manufacturer, retailer and consumers in consumer promotion model. Furthermore, we provide the conditions under which the retailer has an interest in offering price promotion to consumers. Finally, we employ numerical analysis to demonstrate more managerial insights.

Keywords: Supply chain management; Double marginalization; Price promotion; Reference price effects (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (17)

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DOI: 10.1016/j.tre.2015.11.002

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