Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers
Assuming the two retailers decide whether to acquire information to segment consumers and price them differently, we investigate the problem of information acquisition and third-degree price discrimination in the supply chain composed of one common manufacturer and duopoly retailers. We explore how...
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| Format: | Article |
| Language: | English |
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Wiley
2020-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2020/6642711 |
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| _version_ | 1832550936308875264 |
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| author | Hongmei Yang Wei Wang |
| author_facet | Hongmei Yang Wei Wang |
| author_sort | Hongmei Yang |
| collection | DOAJ |
| description | Assuming the two retailers decide whether to acquire information to segment consumers and price them differently, we investigate the problem of information acquisition and third-degree price discrimination in the supply chain composed of one common manufacturer and duopoly retailers. We explore how the supply chain members’ pricing decisions are affected by the fraction of high price-sensitivity consumers and the consumers’ difference in price sensitivity. Analytical results show that the manufacturer’s wholesale price increases with the fraction of high price-sensitivity consumers and decreases with the consumers’ difference in price sensitivity. Moreover, if a retailer chooses to acquire information and price discriminate, the retail prices for two types of consumers increase with the fraction of high price-sensitivity consumers. However, the retail price for consumers with high (low) price sensitivity decreases (increases) with the consumers’ difference in terms of price sensitivity. By comparing the results among different information acquisition and price discrimination decisions, we find that there exist two possible equilibrium decisions for both retailers: both retailers acquire information and price discriminate and no retailer acquires information and each charges a uniform price for all consumers. The strategy which dominates depends on the fraction of high price-sensitivity consumers and the consumers’ difference in price sensitivity. However, compared with no retailer acquiring information, the manufacturer is better off when two retailers acquire information. Consequently, the manufacturer designs a fixed fee contract to stimulate retailers to price discriminate and to achieve a win-win situation for them finally. |
| format | Article |
| id | doaj-art-cf36a4a854624ae28de91305c421c23b |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2020-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-cf36a4a854624ae28de91305c421c23b2025-02-03T06:05:28ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2020-01-01202010.1155/2020/66427116642711Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly RetailersHongmei Yang0Wei Wang1School of Economics, Ocean University of China, Qingdao 266100, ChinaSchool of Economics, Ocean University of China, Qingdao 266100, ChinaAssuming the two retailers decide whether to acquire information to segment consumers and price them differently, we investigate the problem of information acquisition and third-degree price discrimination in the supply chain composed of one common manufacturer and duopoly retailers. We explore how the supply chain members’ pricing decisions are affected by the fraction of high price-sensitivity consumers and the consumers’ difference in price sensitivity. Analytical results show that the manufacturer’s wholesale price increases with the fraction of high price-sensitivity consumers and decreases with the consumers’ difference in price sensitivity. Moreover, if a retailer chooses to acquire information and price discriminate, the retail prices for two types of consumers increase with the fraction of high price-sensitivity consumers. However, the retail price for consumers with high (low) price sensitivity decreases (increases) with the consumers’ difference in terms of price sensitivity. By comparing the results among different information acquisition and price discrimination decisions, we find that there exist two possible equilibrium decisions for both retailers: both retailers acquire information and price discriminate and no retailer acquires information and each charges a uniform price for all consumers. The strategy which dominates depends on the fraction of high price-sensitivity consumers and the consumers’ difference in price sensitivity. However, compared with no retailer acquiring information, the manufacturer is better off when two retailers acquire information. Consequently, the manufacturer designs a fixed fee contract to stimulate retailers to price discriminate and to achieve a win-win situation for them finally.http://dx.doi.org/10.1155/2020/6642711 |
| spellingShingle | Hongmei Yang Wei Wang Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers Discrete Dynamics in Nature and Society |
| title | Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers |
| title_full | Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers |
| title_fullStr | Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers |
| title_full_unstemmed | Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers |
| title_short | Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers |
| title_sort | endogenous third degree price discrimination in a supply chain with one common manufacturer and duopoly retailers |
| url | http://dx.doi.org/10.1155/2020/6642711 |
| work_keys_str_mv | AT hongmeiyang endogenousthirddegreepricediscriminationinasupplychainwithonecommonmanufacturerandduopolyretailers AT weiwang endogenousthirddegreepricediscriminationinasupplychainwithonecommonmanufacturerandduopolyretailers |