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Dual role of price and myopia in a marketing channel

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  • Martín-Herrán, Guiomar
  • Taboubi, Sihem
  • Zaccour, Georges

Abstract

In this paper we study a dynamic two-player channel where the manufacturer controls the wholesale price and the investment in quality and the retailer chooses the retail price. We consider that the retail price affects both the demand and the perceived quality of the brand and that its variations contribute to the building of an internal reference price. One of the model’s distinctive features is that it accounts for the two meanings of price, i.e., its classical objective measure of the cost of acquiring a particular quantity of the product, and its subjective roles as an assessment of the quality of the product and an evaluation of gains or losses (deal vs. sacrifice) resulting from buying a “cheap” or an “expensive” product. This dual computation is done with respect to the internal reference price.

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  • Martín-Herrán, Guiomar & Taboubi, Sihem & Zaccour, Georges, 2012. "Dual role of price and myopia in a marketing channel," European Journal of Operational Research, Elsevier, vol. 219(2), pages 284-295.
    • Handle: RePEc:eee:ejores:v:219:y:2012:i:2:p:284-295
    DOI: 10.1016/j.ejor.2011.12.015
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    7. Yao, Fanjun & Parilina, Elena & Zaccour, Georges & Gao, Hongwei, 2022. "Accounting for consumers’ environmental concern in supply chain contracts," European Journal of Operational Research, Elsevier, vol. 301(3), pages 987-1006.
    8. Fabien Ngendakuriyo & Sihem Taboubi, 2017. "Pricing Strategies of Complementary Products in Distribution Channels: A Dynamic Approach," Dynamic Games and Applications, Springer, vol. 7(1), pages 48-66, March.
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    10. Haoyu Liu & Shulin Liu, 2021. "Optimal decisions and coordination of live streaming selling under revenue‐sharing contracts," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 1022-1036, June.
    11. 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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    14. Fan Zhang & Susu Cheng, 2021. "Behavioral choices in a dynamic duopoly with process innovation and sticky price: Myopia versus farsightedness," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(3), pages 662-674, April.
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    20. Bertrand Crettez & Naila Hayek & Georges Zaccour, 2020. "Existence and characterization of optimal dynamic pricing strategies with reference-price effects," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(2), pages 441-459, June.
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    24. Mukherjee, Arka & Carvalho, Margarida & Zaccour, Georges, 2023. "Managing quality and pricing during a product recall: An analysis of pre-crisis, crisis and post-crisis regimes," European Journal of Operational Research, Elsevier, vol. 307(1), pages 406-420.

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