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Price coordination in distribution channels: A dynamic perspective

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  • Martín-Herrán, Guiomar
  • Taboubi, Sihem

Abstract

In this study, we investigate two important questions related to dynamic pricing in distribution channels: (i) Are coordinated pricing decisions efficient in a context where prices have carry-over effects on demand? (ii) Should firms practice a skimming or a penetration strategy if they choose to coordinate or to decentralize their activities? To answer these questions, we consider a differential game that takes place in a bilateral monopoly where the past retail prices paid by consumers contribute to the building of a reference price. The latter is used by consumers as a benchmark to evaluate the value of the product, and by firms to decide whether to adopt a skimming or a penetration strategy.

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  • Martín-Herrán, Guiomar & Taboubi, Sihem, 2015. "Price coordination in distribution channels: A dynamic perspective," European Journal of Operational Research, Elsevier, vol. 240(2), pages 401-414.
    • Handle: RePEc:eee:ejores:v:240:y:2015:i:2:p:401-414
    DOI: 10.1016/j.ejor.2014.07.022
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    2. Malekian, Yaser & Rasti-Barzoki, Morteza, 2019. "A game theoretic approach to coordinate price promotion and advertising policies with reference price effects in a two-echelon supply chain," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 114-128.
    3. Bo Wang & Ning Wang, 2022. "Decision Models for a Dual-Recycling Channel Reverse Supply Chain with Consumer Strategic Behavior," Sustainability, MDPI, vol. 14(17), pages 1-18, August.
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    8. Colombo, Luca & Labrecciosa, Paola, 2021. "Dynamic oligopoly pricing with reference-price effects," European Journal of Operational Research, Elsevier, vol. 288(3), pages 1006-1016.
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    11. Barman, Abhijit & De, Pijus Kanti & Chakraborty, Ashis Kumar & Lim, Chee Peng & Das, Rubi, 2023. "Optimal pricing policy in a three-layer dual-channel supply chain under government subsidy in green manufacturing," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 204(C), pages 401-429.
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