IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v221y2020ics0925527319302981.html
   My bibliography  Save this article

A game theoretic approach for pricing and determining quality level through coordination contracts in a dual-channel supply chain including manufacturer and packaging company

Author

Listed:
  • Jabarzare, Nahid
  • Rasti-Barzoki, Morteza

Abstract

In this study, a dual-channel supply chain (SC) comprising one manufacturer and one packaging company is considered under price and quality dependent demand. The manufacturer and packaging company compete on offered selling price and quality decisions. For the first time, this study investigates how the packaging company can influence the quality of products through packaging products. We also analyze how different game structures affect the optimal pricing and quality decisions as well as SC members' profit. In doing so, we model the investigated SC under three scenarios: (1) non-cooperative game, (2) cooperative game through revenue-sharing contract, and (3) cooperative game through profit-sharing contract. The results show that the competitive game of manufacturer and packaging company is highly beneficial for price-seeking customers. Moreover, from quality-seeking customers’ perspective, the cooperation of manufacturer and packaging company under profit-sharing contract is more preferable. Furthermore, when the customers' demand is highly sensitive to the products quality, the cooperation of manufacturer and packaging company through profit-sharing contract is more beneficial for them.

Suggested Citation

  • Jabarzare, Nahid & Rasti-Barzoki, Morteza, 2020. "A game theoretic approach for pricing and determining quality level through coordination contracts in a dual-channel supply chain including manufacturer and packaging company," International Journal of Production Economics, Elsevier, vol. 221(C).
    • Handle: RePEc:eee:proeco:v:221:y:2020:i:c:s0925527319302981
    DOI: 10.1016/j.ijpe.2019.09.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527319302981
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2019.09.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Peter J. Danaher & Isaac W. Wilson & Robert A. Davis, 2003. "A Comparison of Online and Offline Consumer Brand Loyalty," Marketing Science, INFORMS, vol. 22(4), pages 461-476, February.
    2. Anthony Dukes & Tansev Geylani & Yunchuan Liu, 2014. "Dominant retailers’ incentives for product quality in asymmetric distribution channels," Marketing Letters, Springer, vol. 25(1), pages 93-107, March.
    3. Cai, Gangshu (George), 2010. "Channel Selection and Coordination in Dual-Channel Supply Chains," Journal of Retailing, Elsevier, vol. 86(1), pages 22-36.
    4. Heydari, Jafar & Govindan, Kannan & Sadeghi, Razieh, 2018. "Reverse supply chain coordination under stochastic remanufacturing capacity," International Journal of Production Economics, Elsevier, vol. 202(C), pages 1-11.
    5. Lu, Jye-Chyi & Tsao, Yu-Chung & Charoensiriwath, Chayakrit, 2011. "Competition under manufacturer service and retail price," Economic Modelling, Elsevier, vol. 28(3), pages 1256-1264, May.
    6. Wang, Xiaojun & Li, Dong, 2012. "A dynamic product quality evaluation based pricing model for perishable food supply chains," Omega, Elsevier, vol. 40(6), pages 906-917.
    7. Giannoccaro, Ilaria & Pontrandolfo, Pierpaolo, 2004. "Supply chain coordination by revenue sharing contracts," International Journal of Production Economics, Elsevier, vol. 89(2), pages 131-139, May.
    8. Zhang, Juan & Gou, Qinglong & Liang, Liang & Huang, Zhimin, 2013. "Supply chain coordination through cooperative advertising with reference price effect," Omega, Elsevier, vol. 41(2), pages 345-353.
    9. Chen, Jing & Zhang, Hui & Sun, Ying, 2012. "Implementing coordination contracts in a manufacturer Stackelberg dual-channel supply chain," Omega, Elsevier, vol. 40(5), pages 571-583.
    10. Wang, Wei & Li, Gang & Cheng, T.C.E., 2016. "Channel selection in a supply chain with a multi-channel retailer: The role of channel operating costs," International Journal of Production Economics, Elsevier, vol. 173(C), pages 54-65.
    11. Yao, Dong-Qing & Yue, Xiaohang & Mukhopadhyay, Samar K. & Wang, Ziping, 2009. "Strategic inventory deployment for retail and e-tail stores," Omega, Elsevier, vol. 37(3), pages 646-658, June.
    12. Hongyan Shi & Yunchuan Liu & Nicholas C. Petruzzi, 2013. "Consumer Heterogeneity, Product Quality, and Distribution Channels," Management Science, INFORMS, vol. 59(5), pages 1162-1176, May.
    13. Wang, Sujuan & Hu, Qiying & Liu, Weiqi, 2017. "Price and quality-based competition and channel structure with consumer loyalty," European Journal of Operational Research, Elsevier, vol. 262(2), pages 563-574.
    14. Chen, Yun Chu & Fang, Shu-Cherng & Wen, Ue-Pyng, 2013. "Pricing policies for substitutable products in a supply chain with Internet and traditional channels," European Journal of Operational Research, Elsevier, vol. 224(3), pages 542-551.
    15. Kurata, Hisashi & Yao, Dong-Qing & Liu, John J., 2007. "Pricing policies under direct vs. indirect channel competition and national vs. store brand competition," European Journal of Operational Research, Elsevier, vol. 180(1), pages 262-281, July.
    16. Pan, Kewen & Lai, K.K. & Leung, Stephen C.H. & Xiao, Di, 2010. "Revenue-sharing versus wholesale price mechanisms under different channel power structures," European Journal of Operational Research, Elsevier, vol. 203(2), pages 532-538, June.
    17. De Giovanni, Pietro, 2011. "Quality improvement vs. advertising support: Which strategy works better for a manufacturer?," European Journal of Operational Research, Elsevier, vol. 208(2), pages 119-130, January.
    18. Cai, Gangshu (George) & Zhang, Zhe George & Zhang, Michael, 2009. "Game theoretical perspectives on dual-channel supply chain competition with price discounts and pricing schemes," International Journal of Production Economics, Elsevier, vol. 117(1), pages 80-96, January.
    19. Edirisinghe, N.C.P. & Bichescu, B. & Shi, X., 2011. "Equilibrium analysis of supply chain structures under power imbalance," European Journal of Operational Research, Elsevier, vol. 214(3), pages 568-578, November.
    20. Hua, Guowei & Wang, Shouyang & Cheng, T.C.E., 2010. "Price and lead time decisions in dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 205(1), pages 113-126, August.
    21. Terrence Hendershott & Jie Zhang, 2006. "A Model of Direct and Intermediated Sales," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 279-316, June.
    22. Singh, Sukhpal, 2007. "Marketing of Liquid Milk: A Case Study of Ahmedabad Milk Market," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 62(3), pages 1-8.
    23. R. Canan Savaskan & Luk N. Van Wassenhove, 2006. "Reverse Channel Design: The Case of Competing Retailers," Management Science, INFORMS, vol. 52(1), pages 1-14, January.
    24. Li, Wei & Chen, Jing, 2018. "Backward integration strategy in a retailer Stackelberg supply chain," Omega, Elsevier, vol. 75(C), pages 118-130.
    25. Chen, Jingxian & Liang, Liang & Yao, Dong-Qing & Sun, Shengnan, 2017. "Price and quality decisions in dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 259(3), pages 935-948.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yan, Yingchen & Zhao, Qiuhong & Qin, Zhongfeng & Sun, Gaoji, 2022. "Integration of development and advertising strategies for multi-attribute products under competition," European Journal of Operational Research, Elsevier, vol. 300(2), pages 490-503.
    2. Jun Dong & A-Ru-Han Bao & Yao Liu & Xi-Hao Dou & Dong-Ran Liu & Gui-Yuan Xue, 2022. "Dynamic Differential Game Strategy of the Energy Big Data Ecosystem Considering Technological Innovation," Sustainability, MDPI, vol. 14(12), pages 1-24, June.
    3. Zhu, Ying & Xia, Tangbin & Chen, Zhen & Pan, Ershun & Xi, Lifeng, 2022. "Optimal maintenance service strategy for OEM entering competitive MRO market under opposite patterns," Reliability Engineering and System Safety, Elsevier, vol. 217(C).
    4. Pi, Zhenyang & Fang, Weiguo & Perera, Sandun C. & Zhang, Baofeng, 2022. "Enhancing the online buyer perception of consumer experience products in a dual-channel supply chain: A new role of free-riding," International Journal of Production Economics, Elsevier, vol. 253(C).
    5. Rasti-Barzoki, Morteza & Moon, Ilkyeong, 2021. "A game theoretic approach for analyzing electric and gasoline-based vehicles’ competition in a supply chain under government sustainable strategies: A case study of South Korea," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).
    6. Ma, Jun & Nault, Barrie R. & Tu, Yiliu (Paul), 2023. "Customer segmentation, pricing, and lead time decisions: A stochastic-user-equilibrium perspective," International Journal of Production Economics, Elsevier, vol. 264(C).
    7. Hou, Rui & Zhao, You & Zhu, Mengqiang & Lin, Xiaogang, 2021. "Price and quality decisions in a vertically-differentiated supply chain with an “Online-to-Store†channel," Journal of Retailing and Consumer Services, Elsevier, vol. 62(C).
    8. Shufan Zhu & Kefan Xie & Ping Gui, 2021. "Dynamic Adjustment Mechanism and Differential Game Model Construction of Mask Emergency Supply Chain Cooperation Based on COVID-19 Outbreak," Sustainability, MDPI, vol. 13(3), pages 1-24, January.
    9. Matsui, Kenji, 2023. "Dual-recycling channel reverse supply chain design of recycling platforms under acquisition price competition," International Journal of Production Economics, Elsevier, vol. 259(C).
    10. Peng, Yongtao & Wang, Wei & Li, Shuanglin & Veglianti, Eleonora, 2022. "Competition and cooperation in the dual-channel green supply chain with customer satisfaction," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 95-113.
    11. Hannan Amoozad Mahdiraji & Aliasghar Abbasi Kamardi & Moein Beheshti & Seyed Hossein Razavi Hajiagha & Luis Rocha-Lona, 2022. "Analysing supply chain coordination mechanisms dealing with repurposing challenges during Covid-19 pandemic in an emerging economy: a multi-layer decision making approach," Operations Management Research, Springer, vol. 15(3), pages 1341-1360, December.
    12. Ye Ye & Baichen Jiang & Binyao Ning & Xinjean Lim & Lijia Hu, 2023. "Does Price Matter in Mainland China? Examine the Factors Influencing Broiler Chicken Purchase Intention," Sustainability, MDPI, vol. 15(4), pages 1-16, February.
    13. Gorji, Mohammad-Ali & Shetab-Boushehri, Seyyed-Nader & Akbarzadeh, Meisam, 2022. "Developing public transportation resilience against the epidemic through government tax policies: A game-theoretic approach," Transport Policy, Elsevier, vol. 128(C), pages 229-239.
    14. Syed Asif Raza, 2022. "A bibliometric analysis of pricing models in supply chain," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 228-251, April.
    15. Zhu, Ying & Xia, Tangbin & Hong, Ge & Chen, Zhen & Pan, Ershun & Xi, Lifeng, 2022. "Collaborative maintenance service and component sales under coopetition patterns for OEMs challenged by booming used-component sales," Reliability Engineering and System Safety, Elsevier, vol. 226(C).
    16. Khosroshahi, Hossein & Azad, Nader & Jabbarzadeh, Armin & Verma, Manish, 2021. "Investigating the level and quality of the information in the environmental disclosure report of a corporation considering government intervention," International Journal of Production Economics, Elsevier, vol. 235(C).
    17. Dong, Shuang & Qin, Zhongfeng & Yan, Yingchen, 2022. "Effects of online-to-offline spillovers on pricing and quality strategies of competing firms," International Journal of Production Economics, Elsevier, vol. 244(C).
    18. Hu, Huaqing & Sun, Shuxiao & Zheng, Xiaona & Chen, Lihua & Huang, Tao, 2021. "Committed or contingent? The retailer’s information acquisition and sharing strategies when confronting manufacturer encroachment," International Journal of Production Economics, Elsevier, vol. 242(C).
    19. Li, Jin & Hu, Zening & Shi, Victor & Wang, Qian, 2021. "Manufacturer's encroachment strategy with substitutable green products," International Journal of Production Economics, Elsevier, vol. 235(C).
    20. Min Li & Zhen Lian & Guangchuan Yang & Liaoning Li, 2023. "Profit-Sharing Contract of the Fresh Agricultural Products Supply Chain under Community Group Purchase Mode Considering Freshness Preservation Efforts," Sustainability, MDPI, vol. 15(9), pages 1-22, May.
    21. Min Li & Lina He & Guangchuan Yang & Zhen Lian, 2022. "Profit-Sharing Contracts for Fresh Agricultural Products Supply Chain Considering Spatio-Temporal Costs," Sustainability, MDPI, vol. 14(4), pages 1-21, February.
    22. Nur Ayvaz‐Çavdaroğlu & Burak Kazaz & Scott Webster, 2021. "Incentivizing Farmers to Invest in Quality through Quality‐Based Payment," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3812-3830, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Jingxian & Liang, Liang & Yao, Dong-Qing & Sun, Shengnan, 2017. "Price and quality decisions in dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 259(3), pages 935-948.
    2. Matsui, Kenji, 2020. "Optimal bargaining timing of a wholesale price for a manufacturer with a retailer in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 287(1), pages 225-236.
    3. Zhang, Yumeng & Hezarkhani, Behzad, 2021. "Competition in dual-channel supply chains: The manufacturers' channel selection," European Journal of Operational Research, Elsevier, vol. 291(1), pages 244-262.
    4. Syed Asif Raza, 2022. "A bibliometric analysis of pricing models in supply chain," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 228-251, April.
    5. Lin, Xiaogang & Zhou, Yong-Wu & Hou, Rui, 2021. "Impact of a “Buy-online-and-pickup-in-store” Channel on Price and Quality Decisions in a Supply Chain," European Journal of Operational Research, Elsevier, vol. 294(3), pages 922-935.
    6. Wan, Xing & Chen, Jing & Li, Wei, 2023. "The impact of retail pricing leadership under manufacturer encroachment," European Journal of Operational Research, Elsevier, vol. 310(1), pages 217-237.
    7. T. M. Rofin & Biswajit Mahanty, 2018. "Optimal dual-channel supply chain configuration for product categories with different customer preference of online channel," Electronic Commerce Research, Springer, vol. 18(3), pages 507-536, September.
    8. Chen, Jingxian & Liang, Liang & Yao, Dong-qing, 2019. "Factory encroachment and channel selection in an outsourced supply chain," International Journal of Production Economics, Elsevier, vol. 215(C), pages 73-83.
    9. Ding, Qing & Dong, Ciwei & Pan, Zhicong, 2016. "A hierarchical pricing decision process on a dual-channel problem with one manufacturer and one retailer," International Journal of Production Economics, Elsevier, vol. 175(C), pages 197-212.
    10. C. Mondal & B. C. Giri & T. Maiti, 2020. "Pricing and greening strategies for a dual-channel closed-loop green supply chain," Flexible Services and Manufacturing Journal, Springer, vol. 32(3), pages 724-761, September.
    11. Matsui, Kenji, 2022. "Should a retailer bargain over a wholesale price with a manufacturer using a dual-channel supply chain?," European Journal of Operational Research, Elsevier, vol. 300(3), pages 1050-1066.
    12. Yong He & Hongfu Huang & Dong Li, 2020. "Inventory and pricing decisions for a dual-channel supply chain with deteriorating products," Operational Research, Springer, vol. 20(3), pages 1461-1503, September.
    13. Matsui, Kenji, 2016. "Asymmetric product distribution between symmetric manufacturers using dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 248(2), pages 646-657.
    14. Wang, Qiang & Wu, Jie & Zhao, Nenggui, 2022. "Optimal operational policies of a dual-channel supply chain considering return service," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 199(C), pages 414-437.
    15. Taleizadeh, Ata Allah & Sadeghi, Razieh, 2019. "Pricing strategies in the competitive reverse supply chains with traditional and e-channels: A game theoretic approach," International Journal of Production Economics, Elsevier, vol. 215(C), pages 48-60.
    16. Matsui, Kenji, 2024. "Should competing suppliers with dual-channel supply chains adopt agency selling in an e-commerce platform?," European Journal of Operational Research, Elsevier, vol. 312(2), pages 587-604.
    17. Zhen-Zheng Zhang & Zong-Jun Wang & Li-Wen Liu, 2015. "Retail Services and Pricing Decisions in a Closed-Loop Supply Chain with Remanufacturing," Sustainability, MDPI, vol. 7(3), pages 1-24, February.
    18. Chen Wei & Sobhan Asian & Gurdal Ertek & Zhi-Hua Hu, 2020. "Location-based pricing and channel selection in a supply chain: a case study from the food retail industry," Annals of Operations Research, Springer, vol. 291(1), pages 959-984, August.
    19. Yan, Yingchen & Zhao, Ruiqing & Liu, Zhibing, 2018. "Strategic introduction of the marketplace channel under spillovers from online to offline sales," European Journal of Operational Research, Elsevier, vol. 267(1), pages 65-77.
    20. Guo Li & Hong Zheng & Mengqi Liu, 2020. "Reselling or drop shipping: Strategic analysis of E-commerce dual-channel structures," Electronic Commerce Research, Springer, vol. 20(3), pages 475-508, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:221:y:2020:i:c:s0925527319302981. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.