Price Discrimination in Input Markets: Downstream Entry and Efficiency

The extant theory on price discrimination in input markets takes the structure of the downstream industry as exogenously given. This paper endogenizes the structure of the downstream industry and examines the effects of permitting third‐degree price discrimination on market structure and welfare. We identify situations where permitting price discrimination leads to either higher or lower wholesale prices for all downstream firms. These findings are driven by upstream profits being discontinuous due to costly entry. Moreover, permitting price discrimination fosters entry which often improves welfare. Nevertheless, entry can also reduce welfare because it may lead to a severe inefficiency in production.     

不对称信息的供应链激励机制研究

研究由单个制造商和单个零售商组成二级供应链,基于市场需求是线性的,且受价格与销售努力的影响。首先,研究在对称信息下,集中模式和分散模式两种情况下的供应链,求出制造商和零售商使得利润达到最优时的最优批发价及销售价;其次,研究了在信息不对称情况下,制造商的机制设计问题,得到了制造商激励批发价的表达式以及零售商的最优零售价的公式;最后利用实例仿真对模型进行分析,结果表明该激励机制对整个供应链的收益有改善作用。     

Corporate social responsibility: The implications of cost improvement and promotion effort

We investigate the interaction of these two strategic decisions when corporate social responsibility (CSR) is incorporated into supply chain partners' decisions. Our results show that, with a noncooperative CSR scenario, the upstream manufacturer is more aggressive in investing in innovation to reduce production costs, which strategically lowers the wholesale price to retailers, and the downstream retailer is also less reluctant to engage in more promotion efforts to induce demand in comparison with a cooperative CSR scenario. Furthermore, the customer's sensitivity to promotion effort may hurt the CSR level of each party.     

考虑强势零售商压价和投资行为的供应链协调

中国流通产业的零供矛盾日益凸显,针对强势零售商的压价问题构建博弈模型并分析其对供应链协调的影响。在由单制造商和单零售商构成的二级供应链中,考虑零售商在主导产品零售价格的同时,通过增加广告投入或提高服务水平等市场投资措施刺激产品需求,探讨当零售商运用其较强的议价能力对制造商提出的批发价进行强制压价时,双方如何通过合作博弈寻找最佳策略。发现在一定的条件下,强势零售商的压价行为不仅可以提升品牌商誉,更能帮助实现供应链协调。     

基于库存调剂的易逝品供应链合作利益分配问题探讨

本文将解决多人合作博弈问题的Shapley值方法用于解决两级易逝品供应链合作利益分配问题。考虑由一个供应商和两个零售商所组成的两级供应链模型,零售商与供应商不合作时,零售商根据供应商的批发价确定订货量,合作时共同决定库存,零售商之间的合作为共同决定订货量且通过库存调剂(转运)共享库存,三方合作可获最大利益,采用Shapley值法可合理分配合作利益,从而使合作更稳定。     

A model of vertical integration and investment in generation capacity in electricity markets: The case of the bidding game

The aim of this work is to assess the impact of (partial) vertical integration between generators and retailers on generation capacity choice and its subsequent welfare consequences. We present a framework in which final demand is perfectly inelastic and stochastic. Nevertheless, wholesale demand is elastic because of the existence of outside opportunities (mainly international transmission capacity). The model is a three-stage game. Neither transmission nor retail costs are taken into account.

In the first stage of the game, generators choose capacity only knowing distribution of demand and thus maximizing their expected profit. The second stage of the game represents the competition for market share between retailers in a market where consumers have switching costs. The former face unknown demand and maximize their utility based on two factors: the expected profit and a risk element. Finally, generators submit bid functions to the system operator given known demand and maximizing their profit during the last stage of the game. Retailers and generators interact in the wholesale market, which is cleared by the system operator whose function is to match supply (represented by the bids of the generators) and demand through a system of single price auctions. The wholesale market is the only means to buy and sell energy; there are no bilateral contracts between firms, except if they are vertically integrated.

We compare fully disintegrated and partially vertically integrated structures using a comparative statics approach. In this paper, the analysis will focus on the last stage of the game: the bidding game. We find that partial vertical integration between generators and retailers tends to lower wholesale prices but not unambiguously. Depending on which firm (vertically integrated or disintegrated generator) has installed the higher capacity and depending on level of demand, prices can stay unchanged or even rise.     

基于损失规避型零售商的供应链协调契约研究

在现代市场竞争日趋激烈的环境下,企业决策者的行为偏好对企业的成败有重大的影响。文章在前景理论的基础上,考虑损失规避型零售商与风险中性的供应商组成的供应链系统。在零售商面临需求受价格影响的前提下,在批发价格契约下分析损失规避特性对决策者行为的影响,最后通过价格补贴契约实现供应链的协调。     

Direct Marketing in Oligopoly

We consider a game in which symmetric manufacturers decide whether to set up sites (e.g., web sites) where consumers can buy their products directly. Following this decision, the manufacturers choose quantities to sell to the retailers, and then the manufacturers with direct‐sales sites and retailers choose quantities to sell to the consumers. We show that since an increase in the number of retailers may drive the direct‐selling manufacturers from the retail market, it may raise the retailers’ profit and reduce social welfare. Finally, we discuss two cases: an oligopolistic wholesale market and a market with price competition and differentiated products.     

两供应商单零售商的货架展示量与定价决策模型

本文从零售商的角度,首先分析了零售商自身利润最大化的分散式决策,然后分别研究了供应链系统利润最大化、供应商和零售商联盟下的渠道利润最大化的集中式决策模型。进而提出了与展示量和零售价格相关的批发价加补贴合同,得到协调零售商的分散式决策,达到与系统利润最大化决策一致的结果。     

Pricing policy and coordination for a two-layer supply chain of duopolistic retailers and socially responsible manufacturer

This paper explores channel coordination and profit distribution in a two-layer socially responsible supply chain that consists of a manufacturer and two competitive retailers. In manufacturer-Stackelberg game setting, the manufacturer exhibits corporate social responsibility and the retailers play Cournot and Collusion games. Besides comparing the optimal decisions of the retailers two game behaviours, the paper analyses the effects of social responsibility on the optimal decisions. It is found that two-part tariff contract resolves channel conflict and provides win–win outcome for a specific range of the franchise fee and it is always possible to find a particular profit split using Nash bargaining product. With increasing social responsibility of the manufacturer, the coordinated wholesale prices of the manufacturer may be both decreasing or ‘U’ shaped and decreasing when the market potentials of the retailers are almost the same or significantly different. Also, at least one coordinated wholesale price is less than the manufacturer's marginal cost. The proposed model is illustrated by a numerical example.     

需求与价格相关条件下的收入共享契约——以XY水泥企业为例

供应链管理的效率已经成为众多现代化企业能否在市场竞争中取胜的关键。同时企业商品的销售价格可以成为影响供应链各成员企业的关键因素之一,文中假设一个两阶段的供应链由上游的XY水泥制造企业和下游的零售商所组成的。分析零售商如何制定合理的水泥销售价格既能保证供应链各成员的稳定收益,又能保证整条供应链效益的最优化。     

The Coordination and Preference of Supply Chain Contracts Based on Time-Sensitivity Promotional Mechanism

To encourage retailers to submit orders as soon as possible, manufacturers usually launch a time-sensitivity promotional mechanism that the earlier you order, the cheaper the wholesale price will be in advance of the selling season. This paper aims to investigate if the mechanism can improve supply chain performance. A dyadic decentralized supply chain system comprising a single manufacturer and a single retailer is viewed as a research framework. Initially, a benchmark model is proposed to provide a criterion-referenced for coordinating the supply chain in a non-standard distribution environment. Second, a time-sensitive wholesale price contract is constructed to confirm that the mechanism can coordinate the supply chain. However, the retailer accepts the entire forecast risk under the contract. An improved contract called a time-sensitive revenue-sharing contract is constructed based on the notion that the manufacturer shares partial forecast risk. The results show that participants can arbitrarily divide the optimal supply chain’s expected profit between the constructed price contracts; however, two differences exist between the contracts, that is, participants have contract preferences. Finally, a numerical analysis and a few management insights are given.     

The role of control power allocation in service supply chains: Model analysis and empirical examination

In complex and competitive business environment, there have been many examples of supply chain members fighting for power. Therefore, researchers have begun focusing on the impact of control power allocation on the supply chain. This paper examines the allocation of power in different service supply chain relationships, analyzing the impact of service level on optimal control power allocation and comparing the differences between the optimal power distribution in service supply chains and that of manufacturing supply chains. We adopt a mathematical model building method to discuss this issue, verifying the theoretical perspectives through empirical studies of China's largest state-owned logistics company, the China Railway Company, and the private ownership enterprise, Tianjin SND Logistics Company. We also develop a conceptual model of the influence of control power on the performance of service supply chains, based on the modeling and case analysis. The conceptual model shows several results: the control power allocation determines the dominant structure of the supply chain; the service provider's wholesale pricing strategy and the service integrator's sales price strategy present different outcomes under various dominant structures of the supply chain, which will greatly affect the performance of the corresponding supply chain; and the relationship between the supply chain dominant structure and the price can be adjusted by the service level.     

The Profit‐Maximizing Case for Corporate Social Responsibility in a Bilateral Monopoly

We analyze a stylized distribution channel (bilateral monopoly) model where an upstream manufacturer sells output to a downstream retailer. In a two‐stage linear demand game setting, we show that a two‐part contract, consisting of a wholesale price and corporate social responsibility (CSR) component, can be utilized by the manufacturer to fully coordinate and control its retailer. Thus, a CSR contract can be used in place of the traditional two‐part tariff scheme (wholesale price and fixed franchise fee) to optimally coordinate the marketing channel. Our model provides a novel theoretical profit‐maximizing rationale for the strategic use of CSR. Copyright © 2013 John Wiley & Sons, Ltd.     

Endogenous R&D spillovers and locational choice with discriminatory pricing

We present a model of spatial price discrimination where R&D spillovers are endogenous as they depend on firms' location. We establish that both the distance between locations and R&D efforts are an increasing function of the transportation cost coefficient and show that there is a continuum of cases where firms will choose an intermediate location. The managerial implications from the model are discussed using examples of marketing behavior by Internet retailers. Copyright © 2004 John Wiley & Sons, Ltd.     

The Interaction between a Most-Favored-Customer Clause and Price Dispersion: An Empirical Examination of the Medicaid Rebate Rules of 1990

This paper examines the effect of the MFC rules adopted by Medicaid on both price dispersion and price levels in the wholesale pharmaceutical market. Theory suggests that the regulations should reduce price dispersion and increase the average price for those products with a high initial level of price dispersion. Using data which can only measure some dimensions of price discrimination, I find that discrimination falls for products sold to hospitals, but not drugstores. Branded drugs facing generic competition have the most dispersion ex ante . Prices of these brands rise with dispersion at the implementation of the new rules. The last two results are consistent with Scott Morton (1997), where I look only at price changes due to the law. The results of this paper confirm that part of the mechanism of action for the price increase is the high level of price dispersion for some products combined with the MFC.     

“When Should Manufacturers Want Fair Trade?”: New Insights from Asymmetric Information when Supply Chains Compete

We study a model of competing manufacturer/retailer pairs where adverse selection and moral hazard are coupled with promotional externalities at the downstream level. In contrast to earlier models mainly focusing on a bilateral monopoly setting, we show that with competing brands a ‘laissez‐faire’ approach towards vertical price control might not always promote productive efficiency. Giving manufacturers freedom to control retail prices is more likely to harm consumers when retailers impose positive promotional externalities on each other, and the converse is true otherwise. Our simple model also suggests that, with competing supply chains, consumers and manufacturers might prefer different contractual modes if promotional externalities have substantial effects on demands.     

Time-sensitive supply chain disruption recovery and resource sharing incentive strategy

Market demand is becoming increasingly time-sensitive in competitive environments. Hence, supply disruptions will have a more serious impact on the profits of supply chains. This study applies a Stackelberg competition between a single supplier and a single manufacturer in a time-sensitive supply chain in a cloud manufacturing environment. We aim to address the supplier’s production capacity recovery issues and the manufacturer’s incentive decision issues after supply disruption. We find that the supplier is in a weak position when the information is symmetrical. The manufacturer can encourage the supplier to shorten the recovery time by raising the unit wholesale price. When the supplier’s unit production cost remains unchanged but the unit wholesale price increases, the profit of the supplier first increases and then decreases. In addition, under the centralized decision-making setting, the optimal recovery time of the supplier is shorter and the optimal unit market price of the product is lower than that under decentralized decision-making. We further find that resource sharing can shorten the optimal recovery time, but it does not necessarily play an incentivizing role.     

Decision analysis and coordination of dual supply chain with retailer's offline return service and online reviews

Based on the centralized and decentralized decision-making cases, this study constructs a dual-channel supply chain game model that considers offline return service and online reviews, and explores the pricing decisions and benefits of supply chains under the dual influence of return service level and online reviews. The impact of return rate, return service level and perceived quality of online reviews on optimal supply chain decisions and profits are further analyzed. Finally, considering the phenomenon of double marginalization in the supply chain, this study coordinates the supply chain based on the benefit-sharing contract coordination model to achieve Pareto improvement. The research shows that: The manufacturer's optimal wholesale price, the optimal online selling price and the retailer's optimal offline price are positively correlated with the perceived quality of online reviews and the level of return service. Compared with the return service level, the perceived quality of online reviews has a greater impact on the overall profit of the supply chain. Under the dual influence of the perceived quality of online reviews and the level of return service, the supply chain profit in the centralized model is better than that in the decentralized model. The coordination model can effectively coordinate the supply chain. Moreover, when the sharing ratio of manufacturers is obviously lower than that of retailers, the coordination effect is better at this time.     

Why should firms manufacture retailer brands?

For firms manufacturing convenience goods there are three branding policies available, a proprietory brand policy, a retailer brand policy and a mixed brand policy. A firm's choice depends on differences in demand and promotion costs between the proprietory and retailer brand markets. This can be analysed using a simple elaboration of the standard 3rd degree price discrimination model. But if the two markets are not independent over the long-term there may be other consequences of following the optimization rules of the model. If retailers develop consumers' preference for their own shops and their own brands, the demand advantage enjoyed by manufacturers' brands may be reduced further. The more willing are manufacturers to supply retailer brands, the more retailers win undermine the demand for manufacturers' proprietory brands.