Pricing and quality competition in a brand-differentiated supply chain

Li, Wei; Chen, Jing

doi:10.1016/j.ijpe.2018.04.026

Cited by 83 publications

(21 citation statements)

References 36 publications

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“…This research focuses on oligopolistic industries with differentiated products and simultaneous price and quality competition (Chioveanu, 2012;Li & Chen, 2018). Such industries constitute up to 50 per cent of all existing industries in a modern economy (for econometric estimations, see, e.g., Flath, 2012).…”

Section: Introductionmentioning

confidence: 99%

COOPERATIVE AND NON-COOPERATIVE R&D IN PRODUCT INNOVATION AND FIRM PERFORMANCE

Karbowski

2019

Journal of Business Economics and Management

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The aim of this article is to investigate the impacts of cooperative and non-cooperative R&D strategies on product innovation and firm performance. Based on the industrial economics literature and the optimisation model, R&D competition, R&D cartelisation, and full industry cartelisation strategies of firms operating on a market with differentiated goods and simultaneous price and quality competition are considered. It is showed that R&D cartelisation entails a loss of firm’s product innovation compared with R&D competition. However, profit-maximising firms do not prefer the R&D competition strategy. They prefer to pursue either R&D cartelisation or full industry cartelisation strategies, depending on the elasticity of demand with respect to the firm’s investment in R&D. The social cost of R&D cartelisation is a loss of product innovation, and the social cost of full industry cartelisation is both the loss of product innovation and the loss of consumer surplus due to a relatively high price and low output of the final product. The latter results carry significant implications for the modern business and public policy.

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Section: Introductionmentioning

confidence: 99%

COOPERATIVE AND NON-COOPERATIVE R&D IN PRODUCT INNOVATION AND FIRM PERFORMANCE

Karbowski

2019

Journal of Business Economics and Management

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“…Main theory Shaked and Sutton [7] Product differentiation + three-stage game model Chang [8] Product differentiation + collusion Goldberg [9] Product differentiation + oligopoly competition Zhang et al [10] Product differentiation + two-stage stochastic programming model Zhao and Du [11] Product differentiation + heterogeneous expectations Meng et al [12] Product differentiation + horizontally competitive + carbon tax Li and Chen [13], Raza and Govindaluri [14] Product differentiation + supply chain Ivanova and Ushchev [15] Product differentiation + CES model…”

Section: Researchermentioning

confidence: 99%

Research on the Influence of Bounded Rationality and Product Differentiation on the Stability of Steel Industry Market

Duan

Zeng-lin

et al. 2020

Discrete Dynamics in Nature and Society

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At present, the problems of homogenization and low quality in China’s iron and steel industry are particularly prominent and the ability of the enterprises to cope with change is insufficient. Adopting product differentiation strategy and dynamic adjustment strategy can allow steel enterprises and the industry to better adapt to future changes. By introducing the product differentiation degree (substitution coefficient) and the bounded rationality strategy to simulate these two strategic means, this paper constructs an extended two-stage dynamic game model to analyse the dynamic game scenarios and steel market stability in China. As new findings, we report the following: (1) The system is more likely to fall into an unbalanced state when multiple enterprises adopt the policy of dynamic output adjustment simultaneously. (2) Enterprises with large output and small output have different output adjustment policies. When enterprises with big-scale output adopt a bit larger adjustment policies, enterprises with small output will be strongly impacted, and the available adjustment space will be sharply compressed. (3) The gradual increase in the difference between products reduces the stability of the market. (4) When product differentiation and bounded rationality strategies coexist, the steel market may fall into an unbalanced state when the degree of product difference increases excessively and the enterprise adopts more drastic output adjustment policies. Therefore, there are pros and cons to product differentiation strategy and bounded rationality adjustment strategy. When each steel oligopoly enterprise formulates a production plan, it needs to comprehensively consider the output changes of the other enterprises and carefully weigh the strategic issues.

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“…The joint competition in pricing and quality has been investigated in detail [2], [14], [22], [27], [13], however, as one of the key elements that represents the quality, the interaction between pricing and modularity, especially considering the different power structures in decision sequence has not been revealed in literature. Therefore, in this paper, the pricing and modularity decisions are optimized and compared by considering two types of competing mechanisms including Stackelberg and Nash games.…”

Section: Feng Tao Hao Shao and Kinkeung Laimentioning

confidence: 99%

Pricing and modularity decisions under competition

Feng¹,

Shao²,

Lai³

2020

Journal of Industrial &Amp; Management Optimization

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This paper considers price and modularity of competition between two firms with deterministic demand, in which demand is dependent on both the prices and the modularity levels determined by two firms. Bertrand competition and Stackelberg competition are formulated to derive the equilibrium solutions analytically. Because of the complexity, an intensive numerical study is conducted to investigate the impact of the sensitive parameters on equilibrium prices and modularity levels, as well as optimal profits of the two firms. An important and interesting finding is that optimal profits of the two firms under both types of competition are decreasing with the modularity cost when the price and modularity sensitivities are low, where both firms are worse-off due to decrease of the modularity levels; but they are increasing when the price and modularity sensitivities are high, where both firms are better-off at the expense of modular design. Our research reveals that Stackelberg game improves the modularity levels in most of the cases, though both firms perform better in Bertrand competition in these cases when jointly deciding the prices and modularity levels in the two firms.

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Pricing and quality competition in a brand-differentiated supply chain

Cited by 83 publications

References 36 publications

COOPERATIVE AND NON-COOPERATIVE R&D IN PRODUCT INNOVATION AND FIRM PERFORMANCE

COOPERATIVE AND NON-COOPERATIVE R&D IN PRODUCT INNOVATION AND FIRM PERFORMANCE

Research on the Influence of Bounded Rationality and Product Differentiation on the Stability of Steel Industry Market

Pricing and modularity decisions under competition

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