Price competition between manufacturers selling to a common retailer under stock-out-based substitution

Kılıç B. D., KARAER Ö., BAKAL İ. S.

Computers and Industrial Engineering, cilt.174, 2022 (SCI-Expanded) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 174
  • Basım Tarihi: 2022
  • Doi Numarası: 10.1016/j.cie.2022.108764
  • Dergi Adı: Computers and Industrial Engineering
  • Derginin Tarandığı İndeksler: Science Citation Index Expanded (SCI-EXPANDED), Scopus, ABI/INFORM, Aerospace Database, Applied Science & Technology Source, Business Source Elite, Business Source Premier, Communication Abstracts, Computer & Applied Sciences, INSPEC, Metadex, DIALNET, Civil Engineering Abstracts
  • Anahtar Kelimeler: Supply chain management, Manufacturer competition, Substitution, Spillover effect, Pricing, 2-ECHELON SUPPLY CHAIN, INVENTORY MANAGEMENT, PRODUCT SUBSTITUTION, CHANNEL DISTRIBUTION, DECISIONS, POLICIES, DUOPOLY, COORDINATION, ASSORTMENT, LEADERSHIP
  • Orta Doğu Teknik Üniversitesi Adresli: Evet

Özet

© 2022 Elsevier LtdWe consider two partially substitutable products sold through a two-echelon supply chain, consisting of two manufacturers and one retailer. In case of a stock-out in one of the products, that product's demand can spill over to the competing product. We analyze the equilibrium pricing decisions of the manufacturers and ordering decision of the retailer in a three stage dynamic game for a single period. We investigate the effect of spillover rates on equilibrium decisions. We also evaluate the impact of spillovers being ignored by one of the manufacturers or all parties in the chain. We find that the retailer's order decision depends on the relative profitability of the products. As spillover rates increase, price competition between the manufacturers intensifies, and hence the double marginalization effect in the chain is mitigated.