Economics at your fingertips  

Pricing Strategies of Complementary Products in Distribution Channels: A Dynamic Approach

Fabien Ngendakuriyo () and Sihem Taboubi ()
Additional contact information
Sihem Taboubi: HEC Montréal

Dynamic Games and Applications, 2017, vol. 7, issue 1, 48-66

Abstract: Abstract This paper investigates the dynamic pricing strategies of firms selling complementary products in a marketing channel. The problem is modelled as a non-cooperative differential game that takes place between decisions makers controlling transfer and retail prices. We computed and compared prices and sales rates of channel members under two scenarios: (i) The first involves a single retailer that sells a unique brand produced by a monopolist manufacturer and (ii) in the second, a complementary product is introduced by an additional manufacturer. We found that in both scenarios, transfer and retail prices decrease over time, but prices decrease faster when the complementary product is introduced into the market. Furthermore, the entry of the complementary product onto the market boosts the sales rate of the existing product. Finally, we found that the retailer in the second scenario always has a non-negative retail margin, meaning that practicing a loss-leadership strategy is not optimal.

Keywords: Differential games; Pricing; Marketing channels; Complementary products (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:

Ordering information: This journal article can be ordered from

Access Statistics for this article

Dynamic Games and Applications is currently edited by Georges Zaccour

More articles in Dynamic Games and Applications from Springer
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-05-16
Handle: RePEc:spr:dyngam:v:7:y:2017:i:1:d:10.1007_s13235-016-0181-7