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Pricing decisions in a carrier–retailer channel under price-sensitive demand and contract-carriage with common-carriage option

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  • Mutlu, Fatih
  • Çetinkaya, Sıla

Abstract

We study a carrier–retailer channel and examine the profitability of the centralized and decentralized channels under price-sensitive demand. In the centralized channel, the problem is to set the retail price that maximizes the total channel profit, whereas in the decentralized channel the individual channel members set their own pricing policy parameters to maximize individual profits in a Stackelberg game. We show that a linear price contract between the carrier and the retailer could lead to channel coordination through a win–win solution. We also show that it is profitable for the retailer to exploit common-carriage complementary to the use of contract carriage.

Suggested Citation

  • Mutlu, Fatih & Çetinkaya, Sıla, 2013. "Pricing decisions in a carrier–retailer channel under price-sensitive demand and contract-carriage with common-carriage option," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 51(C), pages 28-40.
    • Handle: RePEc:eee:transe:v:51:y:2013:i:c:p:28-40
    DOI: 10.1016/j.tre.2012.12.003
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    References listed on IDEAS

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    Cited by:

    1. Ke, Ginger Y. & Bookbinder, James H., 2018. "Coordinating the discount policies for retailer, wholesaler, and less-than-truckload carrier under price-sensitive demand: A tri-level optimization approach," International Journal of Production Economics, Elsevier, vol. 196(C), pages 82-100.
    2. Zhang, Wentao & Uhan, Nelson A. & Dessouky, Maged & Toriello, Alejandro, 2018. "Moulin mechanism design for freight consolidation," Transportation Research Part B: Methodological, Elsevier, vol. 116(C), pages 141-162.
    3. Liu, Shuai & Hua, Guowei & Cheng, T.C.E. & Dong, Jingxin, 2021. "Unmanned vehicle distribution capacity sharing with demand surge under option contracts," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    4. Zheng, Wei & Li, Bo & Song, Dongping, 2022. "The optimal green strategies for competitive ocean carriers under potential regulation," European Journal of Operational Research, Elsevier, vol. 303(2), pages 840-856.
    5. Ata Allah Taleizadeh & Mahsa Noori-daryan, 2016. "Pricing, inventory and production policies in a supply chain of pharmacological products with rework process: a game theoretic approach," Operational Research, Springer, vol. 16(1), pages 89-115, April.

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