On efficiency of multistage channel with bargaining over wholesale prices |
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| Authors: | Feimin Zhong Jinxing Xie Xiaobo Zhao Zuo‐Jun Max Shen |
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| Affiliation: | 1. Department of Mathematical Sciences, Tsinghua University, Beijing, China;2. School of Business Administration, Hunan University, Changsha, China;3. Department of Industrial Engineering, Tsinghua University, Beijing, China;4. Department of Industrial Engineering and Operations Research, University of California, Berkeley, California;5. Department of Civil and Environmental Engineering, University of California, Berkeley, California |
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| Abstract: | This article considers a multistage channel with deterministic price‐sensitive demand. Two systems for pricing decisions, that is, the bargaining system and the leader‐follower system, are compared. We characterize the necessary and sufficient conditions on the power structure, under which the solution of the bargaining system Pareto dominates that of the leader‐follower system. Also, under such conditions, we give a tight upper bound of channel efficiency of the bargaining system, which converges to 100% channel efficiency as the number of stages increases to infinity. © 2016 Wiley Periodicals, Inc. Naval Research Logistics 63: 449–459, 2016 |
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| Keywords: | bargaining multistage channel wholesale price channel efficiency |
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