Strategic Wholesale Pricing and Commonality Strategy in a Supply Chain with Quality Segmentation

Tiantian Xu, Tiaojun Xiao and Chen Tian

Mathematical Problems in Engineering, 2015, vol. 2015, 1-13

Abstract:

We develop two game models of a one-supplier and one-manufacturer supply chain to investigate the supplier’s strategic wholesale pricing decision and the manufacturer’s commonality strategy. The manufacturer has three commonality strategies for the high-end and low-end products: common high-quality component, common low-quality component, and dedicated components. We consider both wholesale price first scenario and commonality strategy first scenario. Under the wholesale price first scenario, we identify the range of each commonality strategy and find that (i) the common low-quality component strategy is harmful to the supplier; (ii) if the quality of low-quality component and the unit production cost of high-quality component are sufficiently low, the supplier induces the common high-quality component strategy by strategically decreasing the unit wholesale price of high-quality component, while if they are sufficiently high, the supplier induces the dedicated components strategy by increasing the unit wholesale price of high-quality component and decreasing that of low-quality one. Under the commonality strategy first scenario, the common low-quality component strategy may exist. By comparing the two scenarios, we find that (i) if the unit production cost of low-quality component is medium, the equilibrium outcomes under both scenarios are identical; (ii) there exists a first-mover advantage for the two players.

Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
http://downloads.hindawi.com/journals/MPE/2015/320219.pdf (application/pdf)
http://downloads.hindawi.com/journals/MPE/2015/320219.xml (text/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hin:jnlmpe:320219

DOI: 10.1155/2015/320219

Access Statistics for this article

More articles in Mathematical Problems in Engineering from Hindawi
Bibliographic data for series maintained by Mohamed Abdelhakeem ().