Pricing Decisions in Dual-Channel Supply Chain Including Monopolistic Manufacturer and Duopolistic Retailers: A Game-Theoretic Approach

Hamed Jafari (), Seyed Reza Hejazi () and Morteza Rasti-Barzoki ()
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Hamed Jafari: Isfahan University of Technology
Seyed Reza Hejazi: Isfahan University of Technology
Morteza Rasti-Barzoki: Isfahan University of Technology

Journal of Industry, Competition and Trade, 2016, vol. 16, issue 3, No 4, 323-343

Abstract: Abstract Emergence of the Internet as a new distribution channel has led to increasing attention by researchers to dual-channel supply chain in recent years. In this paper, pricing and ordering decisions are investigated on a dual-channel supply chain which consists of monopolistic manufacturer and duopolistic retailers. The market is assumed to be controlled by the manufacturer. Thus, the manufacturer becomes leader and the two retailers act as followers. Due to establishing this new structure, different game-theoretic models including Bertrand, Collusion, and Stackelberg are developed to analyze pricing strategies under the various interactions between the two retailers. Then, the equilibrium decisions are compared under the considered scenarios and valuable managerial insights are presented. We found that the various games do not have any effects on the manufacturer’s responses. The retail prices given by the Collusion game are higher than by the other games. In the Collusion model, demands in the retail channel are lower than in the other games. Moreover, the manufacturer and retailers receive respectively the lowest and the highest profits under the Collusion game.

Keywords: Supply chain management; Dual-channel structure; Competition; Monopoly; Duopoly; Game theory; C6; C7; L1; L2 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s10842-016-0224-1

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