Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers

Joint Authors

Yang, Hongmei
Wang, Wei

Source

Discrete Dynamics in Nature and Society

Issue

Vol. 2020, Issue 2020 (31 Dec. 2020), pp.1-15, 15 p.

Publisher

Hindawi Publishing Corporation

Publication Date

2020-12-23

Country of Publication

Egypt

No. of Pages

15

Main Subjects

Mathematics

Abstract EN

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.

American Psychological Association (APA)

Yang, Hongmei& Wang, Wei. 2020. Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers. Discrete Dynamics in Nature and Society،Vol. 2020, no. 2020, pp.1-15.
https://search.emarefa.net/detail/BIM-1153318

Modern Language Association (MLA)

Yang, Hongmei& Wang, Wei. Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers. Discrete Dynamics in Nature and Society No. 2020 (2020), pp.1-15.
https://search.emarefa.net/detail/BIM-1153318

American Medical Association (AMA)

Yang, Hongmei& Wang, Wei. Endogenous Third-Degree Price Discrimination in a Supply Chain with One Common Manufacturer and Duopoly Retailers. Discrete Dynamics in Nature and Society. 2020. Vol. 2020, no. 2020, pp.1-15.
https://search.emarefa.net/detail/BIM-1153318

Data Type

Journal Articles

Language

English

Notes

Includes bibliographical references

Record ID

BIM-1153318