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Seller-Buyer Relationship When End Demand Is Sensitive To Price And Promotion

Author

Listed:
  • MARYAM ESMAEILI

    (Department of Engineering, Alzahra University, Tehran, Iran)

  • PRAKASH L. ABAD

    (McMaster University, Hamilton Ontario, Canada)

  • MIR-BAHADOR ARYANEZHAD

    (Department of Industrial Engineering, Iran University of Science & Technology, Tehran, Iran)

Abstract

In this paper, we consider a seller–buyer channel in which marketing expenditure is an endogenous decision for the buyer. We assume that both the unit marketing expenditure and the unit price charged by the buyer influence the end demand for the product. We model the seller–buyer relationship as a non-cooperative as well as a cooperative game. We investigate the non-cooperative game from two perspectives: the Seller–Stackelberg model and the Buyer–Stackelberg model. In the cooperative game, we provide a procedure for outlining Pareto efficient solutions. For each model, we present a numerical example as well as sensitivity analysis with respect to the two key parameters in the model.

Suggested Citation

  • Maryam Esmaeili & Prakash L. Abad & Mir-Bahador Aryanezhad, 2009. "Seller-Buyer Relationship When End Demand Is Sensitive To Price And Promotion," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 26(05), pages 605-621.
    • Handle: RePEc:wsi:apjorx:v:26:y:2009:i:05:n:s0217595909002353
    DOI: 10.1142/S0217595909002353
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