Pricing and the News Vendor Problem: a Review with Extensions
Operations Research
Selling to the Newsvendor: An Analysis of Price-Only Contracts
Manufacturing & Service Operations Management
Capacity Games in Assembly Systems with Uncertain Demand
Manufacturing & Service Operations Management
Formation of Alliances in Internet-Based Supply Exchanges
Management Science
Positive vs. Negative Externalities in Inventory Management: Implications for Supply Chain Design
Manufacturing & Service Operations Management
Stable Farsighted Coalitions in Competitive Markets
Management Science
Competition, Cooperation, and Information Sharing in a Two-Echelon Assembly System
Manufacturing & Service Operations Management
Inventory Policies in a Decentralized Assembly System
Operations Research
Competition and Cooperation in Decentralized Push and Pull Assembly Systems
Management Science
A Bargaining Framework in Supply Chains: The Assembly Problem
Management Science
Structural Properties of Buyback Contracts for Price-Setting Newsvendors
Manufacturing & Service Operations Management
Coalition Stability in Assembly Models
Operations Research
Product Line Pricing in a Supply Chain
Management Science
Supplier Competition in Decentralized Assembly Systems with Price-Sensitive and Uncertain Demand
Manufacturing & Service Operations Management
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Independent parties that produce perfectly complementary components may form alliances (or coalitions or groups) to better coordinate their pricing decisions when they sell their products to downstream buyers. This paper studies how market demand conditions (i.e., the form of the demand function, demand uncertainty, and price-sensitive demand) drive coalition formation among complementary suppliers. In a deterministic demand model, we show that for an exponential or isoelastic demand function, suppliers always prefer selling in groups; for a linear-power demand function, suppliers may all choose to sell independently in equilibrium. These results are interpreted through the pass-through rate associated with the demand function. In an uncertain demand model, we show that, in general, the introduction of a multiplicative stochastic element in demand has an insignificant impact on stable coalitions and that an endogenous retail price (i.e., demand is price sensitive) increases suppliers' incentives to form alliances relative to the case with a fixed retail price. We also consider the impact of various other factors on stable outcomes in equilibrium, e.g., sequential decision making by coalitions of different sizes, the cost effect due to alliance formation (either cost savings or additional costs), and a system without an assembler.