SELLER-BUYER RELATIONSHIP WHEN END DEMAND IS SENSITIVE TO PRICE AND PROMOTION

Maryam Esmaeili (), Prakash L. Abad () and Mir-Bahador Aryanezhad ()
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Maryam Esmaeili: Department of Engineering, Alzahra University, Tehran, Iran
Prakash L. Abad: McMaster University, Hamilton Ontario, Canada
Mir-Bahador Aryanezhad: Department of Industrial Engineering, Iran University of Science & Technology, Tehran, Iran

Asia-Pacific Journal of Operational Research (APJOR), 2009, vol. 26, issue 05, 605-621

Abstract: In this paper, we consider a seller–buyer channel in which marketing expenditure is an endogenous decision for the buyer. We assume that both the unit marketing expenditure and the unit price charged by the buyer influence the end demand for the product. We model the seller–buyer relationship as a non-cooperative as well as a cooperative game. We investigate the non-cooperative game from two perspectives: the Seller–Stackelberg model and the Buyer–Stackelberg model. In the cooperative game, we provide a procedure for outlining Pareto efficient solutions. For each model, we present a numerical example as well as sensitivity analysis with respect to the two key parameters in the model.

Keywords: Game theory; lot size; pricing; supply chain (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1142/S0217595909002353

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