Coping with Gray Markets: The Impact of Market Conditions and Product Characteristics

• 成果类型: Article
• 署名作者: Ahmadi, Reza; Iravani, Foad; Mamani, Hamed
• 署名单位: University of California System; University of California Los Angeles; University of Washington; University of Washington Seattle
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.12319
• 发表日期: 2015
• 页码: 762-777
• 关键词: Gray markets; parallel importation; parallel markets; Strategic pricing; Demand uncertainty; Uniform pricing

摘要

Gray markets, also known as parallel imports, have created fierce competition for manufacturers in many industries. We analyze the impact of parallel importation on a price-setting manufacturer that serves two markets with uncertain demand, and characterize her policy against parallel importation. We show that ignoring demand uncertainty can take a significant toll on the manufacturer's profit, highlighting the value of making price and quantity decisions jointly. We find that adjusting prices is more effective in controlling gray market activity than reducing product availability, and that parallel importation forces the manufacturer to reduce her price gap while demand uncertainty forces her to lower prices. Furthermore, we explore the impact of market conditions (such as market base, price sensitivity, and demand uncertainty) and product characteristics (fashion vs. commodity) on the manufacturer's policy towards parallel importation. We also provide managerial insights about the value of strategic decision-making by comparing the optimal policy to the uniform pricing policy that has been adopted by some companies to eliminate gray markets entirely. The comparison indicates that the value of making price and quantity decisions strategically is highest for moderately different market conditions and non-commodity products.