Revenue management in resource exchange seller alliances
So Yeon Chun (),
Anton J Kleywegt and
Alexander Shapiro ()
MPRA Paper from University Library of Munich, Germany
The purpose of this paper is to obtain insight into conditions under which a resource exchange alliance can provide greater profit than the setting without an alliance, and to propose a model to design a resource exchange alliance. We first consider a setting in which customers want a combined product assembled from products sold by different sellers. We show that without an alliance the sellers will tend to price their products too high and sell too little, thereby foregoing potential profit, especially when capacity is large. This provides an economic motivation for interest in alliances, because the hope may be that some of the foregone profit may be captured under an alliance. We then consider a resource exchange alliance, including the effect of the alliance on competition among alliance members. We show that the foregone profit may indeed be captured under such an alliance. The problem of determining the optimal amounts of resources to exchange is formulated as a stochastic mathematical program with equilibrium constraints. We show how to determine whether there exists a unique equilibrium after resource exchange, how to compute the equilibrium, and how to compute the optimal resource exchange.
Keywords: Alliance; resource exchange; pricing; revenue management; stochastic mathematical programming with equilibrium constraints; non-cooperative game (search for similar items in EconPapers)
JEL-codes: C68 C61 C72 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/34657/1/MPRA_paper_34657.pdf original version (application/pdf)
Working Paper: Resource Exchange Seller Alliances (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:34657
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().