Stackelberg equilibria in a multiperiod vertical contracting model with uncertain and price-dependent demand
In this paper, we consider Stackelberg games in a multiperiod vertical contracting model with uncertain demand. Demand has a distribution with a mean and variance that depend on the current retail price, and this dependence may vary from period to period. We focus on a class of problems in which the market has a memory-based scaling of demand, and the mean scaling is a function of previous retail prices. This leads to a strategic game in which the parties must balance high immediate profits with reduced future earnings. We propose a complete solution to this multiperiod Stackelberg game, covering cases with finite and infinite horizons. The theory is illustrated by using a Cobb-Douglas demand function with an additive, normally distributed random term, but the theory applies to more general settings.
|Date of creation:||27 Feb 2012|
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- Øksendal, Bernt & Sandal, Leif & Ubøe, Jan, 2013.
"Stochastic Stackelberg equilibria with applications to time-dependent newsvendor models,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 37(7), pages 1284-1299.
- Øksendal, Bernt & Sandal, Leif K. & Ubøe, Jan, 2011. "Stochastic Stackelberg equilibria with applications to time dependent newsvendor models," Discussion Papers 2011/9, Department of Business and Management Science, Norwegian School of Economics.
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- Martin A. Lariviere & Evan L. Porteus, 2001. "Selling to the Newsvendor: An Analysis of Price-Only Contracts," Manufacturing & Service Operations Management, INFORMS, vol. 3(4), pages 293-305, May.
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