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Price coordination in distribution channels: A dynamic perspective

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  • Martín-Herrán, Guiomar
  • Taboubi, Sihem

Abstract

In this study, we investigate two important questions related to dynamic pricing in distribution channels: (i) Are coordinated pricing decisions efficient in a context where prices have carry-over effects on demand? (ii) Should firms practice a skimming or a penetration strategy if they choose to coordinate or to decentralize their activities? To answer these questions, we consider a differential game that takes place in a bilateral monopoly where the past retail prices paid by consumers contribute to the building of a reference price. The latter is used by consumers as a benchmark to evaluate the value of the product, and by firms to decide whether to adopt a skimming or a penetration strategy.

Suggested Citation

  • Martín-Herrán, Guiomar & Taboubi, Sihem, 2015. "Price coordination in distribution channels: A dynamic perspective," European Journal of Operational Research, Elsevier, vol. 240(2), pages 401-414.
  • Handle: RePEc:eee:ejores:v:240:y:2015:i:2:p:401-414
    DOI: 10.1016/j.ejor.2014.07.022
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    References listed on IDEAS

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    1. Gadi Fibich & Arieh Gavious & Oded Lowengart, 2007. "Optimal price promotion in the presence of asymmetric reference-price effects," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(6), pages 569-577.
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    10. 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.
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    Cited by:

    1. repec:wsi:ijitdm:v:16:y:2017:i:06:n:s021962201750002x is not listed on IDEAS
    2. 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.
    3. Lin, Zhibing, 2016. "Price promotion with reference price effects in supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 85(C), pages 52-68.
    4. repec:eee:ejores:v:267:y:2018:i:1:p:162-175 is not listed on IDEAS
    5. repec:eee:proeco:v:191:y:2017:i:c:p:128-142 is not listed on IDEAS

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