Price Competition and Assortment Display in Online Marketplace

Chen, Hongyu; Li, Hanwei; Simchi‐Levi, David; Wu, Michelle Xiao; Zhu, Weiming

doi:10.2139/ssrn.3913764

Cited by 3 publications

(2 citation statements)

References 31 publications

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“…Price competition among retailers greatly affects consumer demand. Most research on price competition is based on simulations (e.g., Reference 14) or game theory (e.g., References 16 and 15). Continuous stochastic modeling is rarely used because of the challenge to derive the actual demand arrival rate under price competition, which is random and may change over time.…”

Section: Discussionmentioning

confidence: 99%

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Dynamic inventory system with pricing adjustment for price‐comparison shoppers

Chen

Katehakis

Tang

2022

Appl Stoch Models Bus & Ind

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With numerous price-comparison websites and applications, consumers today are frequently conducting price-comparison shopping. As a result, retailers face an increasing challenge in predicting consumer demand and determining the optimal product price and inventory level accordingly. To address this issue, this paper proposes an inventory model with joint decisions of price and inventory to optimize the retailer's long-run average profit under price-comparison consumer shopping. We first formulate the demand arrival process for a retailer under price-comparison shopping to be affected by not only its own price but also its competitors'. Based on this demand arrival process, we then formulate the retailer's long-run average profit and derive properties of its optimal solution.Our model focuses on capturing the impact of price-comparison consumers on a retailer's optimal price and inventory decisions. In particular, we allow competitors' prices to affect the retailer's demand via two key factors: the manufacturer's suggested price and the variability of the outside lowest price. According to our results, when the suggested price increases, the retailer should lower its price to obtain more price-comparison customers from competitors, whereas when the variability of outside lowest price increases, the retailer should raise its price to increase per unit profit from nonprice-comparison customers.

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Section: Discussionmentioning

confidence: 99%

“…Karimi et al investigate the Stackelberg‐Nash equilibrium for the vender‐managed inventory system under retailer' competition (see Reference 15). Chen, Hongyu, et al use a game‐theoretical setup to analysis the retailer's response under price competition (see Reference 16).…”

Section: Literature Reviewmentioning

confidence: 99%