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Unified discount pricing models of a two‐echelon channel with a monopolistic manufacturer and heterogeneous retailers
Author(s) -
Yang ShanLin,
Zhou YongWu
Publication year - 2006
Publication title -
international transactions in operational research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.032
H-Index - 52
eISSN - 1475-3995
pISSN - 0969-6016
DOI - 10.1111/j.1475-3995.2006.00540.x
Subject(s) - monopolistic competition , stackelberg competition , profit (economics) , microeconomics , scheme (mathematics) , cannibalization , channel (broadcasting) , pricing strategies , nonlinear pricing , economics , computer science , industrial organization , mathematics , monopoly , mathematical analysis , computer network
This paper considers a two‐echelon channel in which a monopolistic manufacturer supplies a single product to multiple heterogeneous retailers who are in separate markets. The present paper studies the problem of how the manufacturer in a manufacturer‐Stackelberg game designs a unified quantity‐discount pricing scheme to improve the whole channel's profit as well as each partner's profit. Considered in the paper are two types of unified quantity‐discount pricing schemes: the regular quantity‐discount pricing scheme and the incremental volume discount pricing scheme. Each of the two types of schemes includes a single price‐break discount policy and a non‐linear quantity discount policy. Optimal solutions are derived and numerical examples presented to illustrate the efficiency of each discount policy.