IDEAS home Printed from https://ideas.repec.org/a/taf/tprsxx/v54y2016i9p2791-2806.html
   My bibliography  Save this article

Price and lead time differentiation, capacity strategy and market competition

Author

Listed:
  • S. Jayaswal
  • E.M. Jewkes

Abstract

We study a duopoly market in which customers are heterogeneous, and can be segmented as price or time sensitive. Each firm tailors (differentiates) its products/services for the two customer classes solely based on guaranteed lead time and the corresponding price. Our objective is to understand how competition affects price and lead time differentiation of the firms in the presence of different operations strategy (shared versus dedicated capacity), product substitution and asymmetry between the competing firms. Our results suggest that when firms use dedicated resources to serve the two market segments, pure price competition always tends to decrease individual prices as well as price differentiation, irrespective of the market behaviour. Further, the effect of competition is more pronounced when customers are allowed to self-select, thereby introducing substitutability between the two product options. On the other hand, when firms compete in time, in addition to price, the effect of competition on product differentiation depends crucially on the behaviour of the market. Our results further suggest that the firm with a larger market base should always maintain a larger price and lead time differentiation between the two market segments. Similarly, the firm with a capacity cost advantage should also maintain a larger lead time differentiation.

Suggested Citation

  • S. Jayaswal & E.M. Jewkes, 2016. "Price and lead time differentiation, capacity strategy and market competition," International Journal of Production Research, Taylor & Francis Journals, vol. 54(9), pages 2791-2806, May.
    • Handle: RePEc:taf:tprsxx:v:54:y:2016:i:9:p:2791-2806
    DOI: 10.1080/00207543.2016.1145816
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00207543.2016.1145816
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00207543.2016.1145816?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.

    Citations

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


    Cited by:

    1. Naiqian Zuo & Shiyou Qu & Chengzhang Li & Wentao Zhan, 2021. "The Order Selection Strategy of Polluting OEMs under Environmental Regulations," Sustainability, MDPI, vol. 13(12), pages 1-15, June.
    2. Sachin Jayaswal & Navneet Vidyarthi, 2017. "Facility location under service level constraints for heterogeneous customers," Annals of Operations Research, Springer, vol. 253(1), pages 275-305, June.
    3. Hammami, Ramzi & Frein, Yannick & Nouira, Imen & Albana, Abduh-Sayid, 2022. "On the interplay between local lead times, overall lead time, prices, and profits in decentralized supply chains," International Journal of Production Economics, Elsevier, vol. 243(C).
    4. Tiwari, Richa & Jayaswal, Sachin & Sinha, Ankur, 2021. "Competitive hub location problem: Model and solution approaches," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 237-261.
    5. Jalili Marand, Ata & Li, Hongyan & Thorstenson, Anders, 2019. "Joint inventory control and pricing in a service-inventory system," International Journal of Production Economics, Elsevier, vol. 209(C), pages 78-91.
    6. Sneha Dhyani Bhatt & Sachin Jayaswal & Ankur Sinha & Navneet Vidyarthi, 2021. "Alternate second order conic program reformulations for hub location under stochastic demand and congestion," Annals of Operations Research, Springer, vol. 304(1), pages 481-527, September.
    7. Sun, Mingyao & Ng, Chi To & Wu, Feng & Cheng, T.C.E., 2022. "Optimization of after-sales services with spare parts consumption and repairman travel," International Journal of Production Economics, Elsevier, vol. 244(C).
    8. Mehmet Ali Soytaş & Damla Durak Uşar & Meltem Denizel, 2022. "Estimation of the static corporate sustainability interactions," International Journal of Production Research, Taylor & Francis Journals, vol. 60(4), pages 1245-1264, February.

    More about this item

    Statistics

    Access and download statistics

    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:taf:tprsxx:v:54:y:2016:i:9:p:2791-2806. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TPRS20 .

    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.