The Competing Retailers Pricing Research Based on Logistic Model

Chaogan Li () and Hongjie Lan ()
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Chaogan Li: Beijing Jiaotong University
Hongjie Lan: Beijing Jiaotong University

A chapter in LISS 2013, 2015, pp 533-540 from Springer

Abstract: Abstract This paper analyzes the competition between two retailers with an identical supplier based on the Logistic model. As a result, a new kind of nonlinear demand function is developed with service level taken into consideration. Under the situation that price information is known to each retailer, a pricing strategy is given to the maximize revenue of the retailers, which actually simulates the “price war”. Furthermore we give a Nash equilibrium solution which is the result of price adjusting. A numerical example is conducted to survey the equilibrium prices and corresponding revenues of two retailers. Here come some interesting findings. The retailers can achieve optimal revenue simultaneously at certain service levels. And it’s proved that improving service level can bring positive externality, which is smaller than its own revenue increase.

Keywords: Logistic model; Pricing strategy; Non-linear demand functions; Nash equilibrium (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-40660-7_79

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DOI: 10.1007/978-3-642-40660-7_79

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