Marketing-production decisions in an industrial channel of distribution
Management Science
Optimal price skimming by a monopolist facing rational consumers
Management Science
Optimal monopolist pricing under demand uncertainty in dynamic markets
Management Science
Channel coordination and quantity discounts
Management Science
Optimal Pricing Strategy for New Products
Management Science
Quantity Flexibility Contracts and Supply Chain Performance
Manufacturing & Service Operations Management
Diffusion of Innovations Under Supply Constraints
Operations Research
New Product Introduction: Timing, Design, and Pricing
Manufacturing & Service Operations Management
Benefits of Channel Discord in the Sale of Durable Goods
Marketing Science
Intertemporal Pricing with Strategic Customer Behavior
Management Science
Manufacturing & Service Operations Management
Optimal Pricing of Seasonal Products in the Presence of Forward-Looking Consumers
Manufacturing & Service Operations Management
Inventory, Discounts, and the Timing Effect
Manufacturing & Service Operations Management
Revenue Management with Costly Price Adjustments
Operations Research
Dynamic Pricing with Loss-Averse Consumers and Peak-End Anchoring
Operations Research
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This study extends the single-period vertical price interaction in a manufacturer--retailer dyad to a multiperiod setting. A manufacturer distributes a durable product through an exclusive retailer to an exhaustible population of consumers with heterogeneous reservation prices. In each period, the manufacturer and retailer in turn set wholesale and retail prices, respectively, and customers with valuation above the retail price adopt the product at a constant (hazard) rate. We derive the open-loop, feedback, and myopic equilibria for this dynamic pricing game and compare it to the centralized solution. Although in an integrated supply chain a forward-looking dynamic pricing strategy is always desirable, we show that this is not the case in a decentralized setting, because of vertical competition. Our main result is that both supply chain entities are better off in the long run when they ignore the impact of current prices on future demand and focus on immediate-term profits. A numerical study confirms that this insight is robust under various supply-and demand-side effects. We use the channel efficiency corresponding to various pricing rules to further derive insights into decisions on decentralization and disintermediation.