Firms’ Strategic Pricing and Network Externalities

Zhou, Jian; Xu, Rongfei

doi:10.1155/2020/2859073

Cited by 4 publications

(4 citation statements)

References 21 publications

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“…The definition of network externality in Yi and Yang (2017) is that an increased number of consumers who enhance the utility gained from their own purchases by purchasing similar or compatible products. Current studies on network externalities mainly focus on product pricing (Xu et al, 2020;Zhou and Xu, 2020), product research and development (Li, 2020;Xing, 2014) and product compatibility (Choi and Lee, 2017;Li and Chen, 2012). Regarding product pricing strategies, Yi and Yang (2017) analyzed the impact of indirect network externalities on manufacturers' wholesale prices and retailers' marketing strategies.…”

Section: Network Externalitiesmentioning

confidence: 99%

“…Current studies on network externalities mainly focus on product pricing (Xu et al. , 2020; Zhou and Xu, 2020), product research and development (Li, 2020; Xing, 2014) and product compatibility (Choi and Lee, 2017; Li and Chen, 2012). Regarding product pricing strategies, Yi and Yang (2017) analyzed the impact of indirect network externalities on manufacturers’ wholesale prices and retailers’ marketing strategies.…”

Section: Literature Reviewmentioning

confidence: 99%

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Advertising and pricing of online direct selling considering network externalities

Shen

Fan

Wang

et al. 2022

IMDS

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PurposeConsidering the network externalities of online selling, this paper builds three different online direct selling models: manufacturer direct selling (MN model), network platform direct selling (NN model) and retailer direct selling (RN model). The optimal advertising and pricing decision and corporate profits under each selling model are investigated.Design/methodology/approachCombining the characteristics of online direct selling, this paper formulates direct selling models that are dominated by different companies as Stackelberg game models. Numerical analyses are carried out, along with the comparison of the equilibrium solutions for each model.FindingsThe authors' research shows that increasing network externalities is conducive to the development of enterprises. The network platform's profit is the lowest in the RN model and the highest in the NN one. The comparison of manufacturers' profits between the MN model and the NN model primarily depends on consumers' sensitivities for sales price and advertising promotion level. The manufacturer does not benefit from the RN model due to the lowest efficiency.Originality/valueCoupled with three different online direct selling models and detailed analyses of the optimal solutions, this study has enriched the theoretical foundation of online direct selling. Moreover, this study extends the research of network externalities to the field of e-commerce, revealing the network externalities' influence on the decision-making of the e-supply chain.

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Section: Network Externalitiesmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Advertising and pricing of online direct selling considering network externalities

Shen

Fan

Wang

et al. 2022

IMDS

View full text Add to dashboard Cite

show abstract

“…Pal [34] analyzed the influences of network externalities using the Cournot game model and the Bertrand game model and found that if there are positive network externalities, the Bertrand model can lead to lower prices and corporate profits. Based on different decision-making models, Zhou and Xu [35] studied the impact of network externalities on the company's product pricing, market share, and profits. They found that in the model of a nonstrategic firm facing nonstrategic consumers, the increase in network externalities is beneficial to the profits of one company, but not to the profits of another company.…”

Section: Network Externalities In the Supply Chainmentioning

confidence: 99%

Advertising Decisions of Platform Supply Chains Considering Network Externalities and Fairness Concerns

et al. 2022

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With the popularization of platform economics, many manufacturers are shifting their operations from offline to online, forming platform supply chains (PSCs), which combine e-commerce with supply chain management. To study the influences of network externalities and fairness concerns on advertising strategies of the platform supply chain (PSC), we construct decentralized decision-making models, with and without fairness concerns. Then, we solve the optimal decisions regarding PSC and use numerical examples to verify the conclusions of the decision models. We further analyze the internal influences of advertising strategies on network externalities in the extended model. We find that the network externalities are beneficial to the PSC system, but the manufacturer’s fairness concerns are not beneficial to the PSC. The advertising strategies of the network platform are not affected by network externalities and fairness concerns. In the extended model, the manufacturer can obtain more profits, but the network platform yields less profit than the decentralized model without fairness concerns. Moreover, the more sensitive the network externalities are to the change in advertising strategies, the greater the profits for the PSC members.

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“…Companies generally focus on maximizing their total profits in the pricing decision-making process without considering the strategic behavior of consumers (Zhou & Xu, 2020) in their market segment. For example, business owners may determine margins excessively in price determination when they know that consumers do not know the market price information of the product.…”

Section: Introductionmentioning

confidence: 99%

Subjective Meaning of Strategic Pricing Decision Making based on Islamic Values in the Muslim Business community

Junaedi

Prihanisetyo²

2022

IQTISHADIA

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<p><em>Fierce competition in business often encourages businesses to act unreasonably in their pricing strategies. Orientation to maximum profit often trumps the ethical values derived from religious teachings. This study aims to find the meaning of strategic pricing decision-making of Muslim businessmen based on their awareness of Islamic values. Islamic values arise from the perception of business people as a reflection of knowledge about Islamic ethics that they understand. The research method used is transcendental phenomenology. The sampling was conducted on five businesspeople members of the Indonesian Islamic Business Forum (IIBF). This study found that Muslim businessmen Interpret strategic pricing decision-making according to their awareness of Islamic values as a form of justice, namely fairness in pricing based on market segments and based on product value-added. This research will provide knowledge to business people to consider ethics in the strategic policy of price management conducted.</em></p>

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Firms’ Strategic Pricing and Network Externalities

Cited by 4 publications

References 21 publications

Advertising and pricing of online direct selling considering network externalities

Advertising and pricing of online direct selling considering network externalities

Advertising Decisions of Platform Supply Chains Considering Network Externalities and Fairness Concerns

Subjective Meaning of Strategic Pricing Decision Making based on Islamic Values in the Muslim Business community

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