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Pricing Decisions in Dual-Channel Supply Chain Including Monopolistic Manufacturer and Duopolistic Retailers: A Game-Theoretic Approach

Author

Listed:
  • Hamed Jafari

    (Isfahan University of Technology)

  • Seyed Reza Hejazi

    (Isfahan University of Technology)

  • Morteza Rasti-Barzoki

    (Isfahan University of Technology)

Abstract

Emergence of the Internet as a new distribution channel has led to increasing attention by researchers to dual-channel supply chain in recent years. In this paper, pricing and ordering decisions are investigated on a dual-channel supply chain which consists of monopolistic manufacturer and duopolistic retailers. The market is assumed to be controlled by the manufacturer. Thus, the manufacturer becomes leader and the two retailers act as followers. Due to establishing this new structure, different game-theoretic models including Bertrand, Collusion, and Stackelberg are developed to analyze pricing strategies under the various interactions between the two retailers. Then, the equilibrium decisions are compared under the considered scenarios and valuable managerial insights are presented. We found that the various games do not have any effects on the manufacturer’s responses. The retail prices given by the Collusion game are higher than by the other games. In the Collusion model, demands in the retail channel are lower than in the other games. Moreover, the manufacturer and retailers receive respectively the lowest and the highest profits under the Collusion game.

Suggested Citation

  • Hamed Jafari & Seyed Reza Hejazi & Morteza Rasti-Barzoki, 2016. "Pricing Decisions in Dual-Channel Supply Chain Including Monopolistic Manufacturer and Duopolistic Retailers: A Game-Theoretic Approach," Journal of Industry, Competition and Trade, Springer, vol. 16(3), pages 323-343, September.
    • Handle: RePEc:kap:jincot:v:16:y:2016:i:3:d:10.1007_s10842-016-0224-1
    DOI: 10.1007/s10842-016-0224-1
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    3. Chen, Xi & Zhang, Hui & Zhang, Michael & Chen, Jing, 2017. "Optimal decisions in a retailer Stackelberg supply chain," International Journal of Production Economics, Elsevier, vol. 187(C), pages 260-270.
    4. Rubi Das & Abhijit Barman & Balaji Roy & Pijus Kanti De, 2023. "Pricing and greening strategies in a dual-channel supply chain with cost and profit sharing contracts," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(6), pages 5053-5086, June.
    5. Soroush Safarzadeh, 2023. "A game theoretic approach for pricing and advertising of an integrated product family in a duopoly," Journal of Combinatorial Optimization, Springer, vol. 45(5), pages 1-26, July.
    6. Mohit Tiwari & Tripti Tiwari & Samuel Sam Santhose & Lokanath Mishra & Rejeesh MR & Vinu Sundararaj, 2023. "Corporate social responsibility and supply chain: A study for evaluating corporate hypocrisy with special focus on stakeholders," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1391-1403, April.
    7. Zhang, Guangming & Dai, Gengxin & Sun, Hao & Zhang, Guitao & Yang, Zhilin, 2020. "Equilibrium in supply chain network with competition and service level between channels considering consumers' channel preferences," Journal of Retailing and Consumer Services, Elsevier, vol. 57(C).
    8. T. M. Rofin & Biswajit Mahanty, 2021. "Impact of wholesale price discrimination on the profit of chain members under different channel power structures," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(2), pages 91-107, April.
    9. Chirantan Mondal & Bibhas C. Giri, 2022. "Retailers’ competition and cooperation in a closed-loop green supply chain under governmental intervention and cap-and-trade policy," Operational Research, Springer, vol. 22(2), pages 859-894, April.

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