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Pricing for Products in Website-Dominant Static Group-buying

Author

Listed:
  • Sheng Li
  • Huifang Feng
  • Yu Huang

Abstract

We develop a game model to describe the game between a seller and a group-buying website in order to study the operating mode of Chinese static group-buying(GB). A seller sells products by a website and allocates a proportion of revenue to it. Based on this mode we establish the profit function of the seller and that of the GB website. The website decides its allocation proportion and the sale price of its products according to the profit maximization principle and the revenue sharing proportion in the contract. We then analyze the relationship among different parameters and find that the products¡¯ price decreasing with the increasing of the revenue sharing proportion. In addition, there also exists an optimal GB period to maximize the seller¡¯s profit in a GB.

Suggested Citation

  • Sheng Li & Huifang Feng & Yu Huang, 2017. "Pricing for Products in Website-Dominant Static Group-buying," Business and Management Research, Business and Management Research, Sciedu Press, vol. 6(3), pages 94-101, September.
    • Handle: RePEc:jfr:bmr111:v:6:y:2017:i:3:p:94-101
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    References listed on IDEAS

    as
    1. C K Anderson & J G Wilson, 2003. "Wait or buy? The strategic consumer: Pricing and profit implications," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(3), pages 299-306, March.
    2. Krishnan S. Anand & Ravi Aron, 2003. "Group Buying on the Web: A Comparison of Price-Discovery Mechanisms," Management Science, INFORMS, vol. 49(11), pages 1546-1562, November.
    3. Xiaoqing Jing & Jinhong Xie, 2011. "Group Buying: A New Mechanism for Selling Through Social Interactions," Management Science, INFORMS, vol. 57(8), pages 1354-1372, August.
    4. Liang, Xiaoying & Ma, Lijun & Xie, Lei & Yan, Houmin, 2014. "The informational aspect of the group-buying mechanism," European Journal of Operational Research, Elsevier, vol. 234(1), pages 331-340.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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