A Note on Optimal Selling to Asymmetric Retailers | Zendy

Kostamis Dimitris | Zendy

AI Assistant Blog Pricing

Home ZAIA Blog

Premium

A Note on Optimal Selling to Asymmetric Retailers

Author(s) -

Kostamis Dimitris

Publication year - 2013

Publication title -

production and operations management

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 3.279

H-Index - 110

eISSN - 1937-5956

pISSN - 1059-1478

DOI - 10.1111/poms.12008

Subject(s) - business , competition (biology) , microeconomics , product (mathematics) , industrial organization , information asymmetry , imperfect , marginal cost , imperfect competition , mechanism (biology) , economics , mathematics , ecology , linguistics , philosophy , geometry , epistemology , biology

I consider a channel with one manufacturer selling the same product to two retailers engaged in imperfect competition. The retailers are asymmetric because one has a lower marginal selling cost (or a higher demand potential) than the other. I design the manufacturer's optimal selling mechanism, whereby the manufacturer must offer the same contract options to both retailers. I fully characterize the manufacturer's optimal selling mechanism for varying degrees of retailer asymmetry and competition intensity. I find that under certain conditions, the manufacturer is better off selling a larger quantity through the high‐cost (or low‐demand potential) retailer. I also show how the optimal mechanism can be implemented using a menu of two‐part tariffs with quantity controls.

This content is not available in your region!

Continue researching here.

Having issues? You can contact us here

Accelerating Research