Wholesale price discrimination: Innovation incentives and upstream competition

Akgun, U.; Chioveanu, Ioana

doi:10.1111/jems.12284

Cited by 7 publications

(6 citation statements)

References 11 publications

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“…Our analysis also closely relates to the literature on input price discrimination with cost-reducing R&D (e.g., Akgün & Chioveanu, 2019;Herweg & Müller, 2014;Inderst & Valletti, 2009;Pinopoulos, 2020) in the sense that we consider a dynamic model. DeGraba (1990) shows input price discrimination weakens the investment incentive for a firm due to the higher wholesale price charged to efficient firms.…”

Section: Introductionmentioning

confidence: 91%

Input price discrimination and strategic inventory

Matsuoka

2023

The Manchester School

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We consider a two-period model with strategic inventory and explore the welfare implications of banning input price discrimination. We find that inventory incentive is stronger under input price discrimination. Under uniform pricing, an increase in an inventory of a firm equally lowers the rival's wholesale price. It expands the rival's production, suppresses the firm's output, and weakens the incen tive.We also find that the weak incentive leads to higher quantity-weighted average wholesale and retail prices.Therefore, allowing input price discrimination alleviates double marginalization and leads to higher consumer surplus and social welfare.

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Section: Introductionmentioning

confidence: 91%

Input price discrimination and strategic inventory

Matsuoka

2023

The Manchester School

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“…In addition to them, Deng et al (2019), Gozman, Liebenau, and Mangan (2018) and Nuruzzaman, Singh, and Pattnaik (2018) focused on this issue and reached the conclusion that the products and services of competitors are shaped by the company's decision to develop innovative products. On the other side, Akgün and Chioveanu (2019), Marshall and Parra (2019) and Negassi et al (2019) identified that although a company develops an innovative product, if it fails to meet its needs in comparison with its competitors' products, this will have a negative impact on the company. The importance of market analysis in generating innovative product was also underlined by different researchers (Liu et al, 2018; Weimann, 2019; Xia & Liu, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Stochastic hybrid decision‐making based on interval type 2 fuzzy sets for measuring the innovation capacities of financial institutions

2020

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This study aims to construct a hybrid decision‐making approach to the stochastic evaluation for the innovation capacity of financial institutions. For this purpose, interval type 2 fuzzy DEMATEL‐ANP is used for weighting the criteria and dimensions. Additionally, TOPSIS and VIKOR methods based on interval type 2 fuzzy sets are considered to rank the alternatives. The novelty of the study is to propose a set of criteria and dimensions of innovation capacity with the supported literature. Another novelty is to propose an extended method of DEMATEL‐ANP by using interval type 2 fuzzy sets as well as an integrated method of interval type 2 fuzzy stochastic decision‐making with the Monte Carlo simulation. The results indicate that organizational dimension of innovation capacities has the highest importance between the set of criteria and the state‐owned banks have been more appropriate than both the private and foreign banks for generating the innovation capacities in the financial institutions. However, the analysis illustrates that stochastic decision‐making models could provide more extensive results than the conventional methods including the expert priorities. This study could be also extended by using different multicriteria decision‐making methods such as MOORA and ELECTRE and also, the cross‐country analysis could be applied for the future studies.

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“…The study is entirely analytical and uses game-theoretic models (Hamamura, 2022; Lu et al , 2022; Xie et al , 2022; Zaheri et al , 2021) like Stackelberg game (Chen et al , 2017; Lee et al , 2021; Li et al , 2018; Tang et al , 2021; Zhang and He, 2016; Zhao et al , 2020) and horizontal Nash game (Farham-Nia and Ghaffari-Hadigheh, 2021; Li et al , 2018; Zhang and Hezarkhani, 2021; Zhao et al , 2020) for the analysis. This is mainly because wholesale prices are not widely collected and analysed like retail prices (De Giovanni, 2018; Rofin and Mahanty, 2020, 2021; Akgün and Chioveanu, 2019; Marshall, 2020). Thus, rather than empirical methods, analytical methods are convenient and reliable for analysing wholesale price.…”

Section: Introductionmentioning

confidence: 99%

“…Analysing the wholesale price charged by the manufacturer is essential as its trickledown effect significantly impacts the profit margin of all the downstream channel partners and the consumer surplus of the customers (De Giovanni, 2018; Rofin and Mahanty, 2020, 2021). Two schemes are available for wholesale pricing EWP, which translates to selling at the same wholesale price to all the downstream channel partners and DWP, which means selling products to different manufacturers at different wholesale prices (Akgün and Chioveanu, 2019; Marshall, 2020). But many countries consider that the DWP is against fair competition and prohibits it by law (Rofin and Mahanty, 2020, 2021).…”

Section: Introductionmentioning

confidence: 99%

Do wholesale pricing strategies matter during asymmetric disruptions? A game theoretic analysis

Raju,

T.M.,

et al. 2023

JM2

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Purpose In most economies, there are rules from the market regulators or government to sell at an equal wholesale price (EWP). But when one upstream channel is facing a negative demand disruption and another positive, EWP can create extra pressure on the disadvantageous supply chain partner, which faces negative disruption. The purpose of this study is to analyse the impact of EWP and the scope of the discriminatory wholesale price (DWP) during disruptions. Design/methodology/approach For the study, the authors used a dual-channel supply chain consisting of a manufacturer, online retailer (OR) and traditional brick-and-mortar (BM) retailer. Stackelberg game is used to model the interaction between the upstream and downstream channel partners, and the horizontal Nash game to analyse the interaction within downstream channel partners. For modelling asymmetric disruption, the authors took instances from the lock-down and post-lock-down periods of the COVID-19 pandemic, where consumers flow from BM retailer to OR store. Findings By analysing the disruption period, the authors found that this asymmetric disruption is detrimental to the BM channel, favourable to OR and has no impact on the manufacturer. But with DWP, the authors found that the profit of the BM channel and manufacturer can be increased during disruption. Though the profit of the OR decreased, it was found to be higher than in the pre-disruption period. Under DWP, the consumer surplus increased during disruption, making it favourable for the customers also. Thus, DWP can aid in creating a win-win strategy for all the supply chain partners during asymmetric disruption. Later as an extension to the study, the authors analysed the impact of the consumer transfer factor and found that it plays a crucial role in the optimal decisions of the channel partner during DWP. Originality/value Very scant literature analyses the intersection of DWP and disruptions. To the best of the authors’ knowledge, this study, for the first time uses DWP as a tool to help the disadvantageous supply chain partner during asymmetric disruptions. The study findings will assist the government, market regulators and manufacturers in revamping the wholesale pricing policies and strategies to help the disadvantageous supply chain partner during asymmetric disruption.

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Wholesale price discrimination: Innovation incentives and upstream competition

Cited by 7 publications

References 11 publications

Input price discrimination and strategic inventory

Input price discrimination and strategic inventory

Stochastic hybrid decision‐making based on interval type 2 fuzzy sets for measuring the innovation capacities of financial institutions

Do wholesale pricing strategies matter during asymmetric disruptions? A game theoretic analysis

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