Dynamic Pricing in a Distribution Channel in the Presence of Switching Costs

• 成果类型: Article
• 署名作者: Cosguner, Koray; Chan, Tat Y.; Seetharaman, P. B. (Seethu)
• 署名单位: University System of Georgia; Georgia State University; Washington University (WUSTL)
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2016.2649
• 发表日期: 2018
• 页码: 1212-1229
• 关键词: Dynamic pricing; switching costs; distribution channel; structural econometric models

摘要

We advance the literature on dynamic oligopoly pricing models in the presence of switching costs by additionally modeling the strategic pricing role of the retailer within the distribution channel. In doing this, we study the relative dynamic pricing implications of how current retail and wholesale prices for a brand must optimally take into account past and future demand, respectively, for the brand. Using scanner data from the cola market, we find that while the retailer exploits the benefit of inertial demand by appropriately increasing the retail profit margin, the cost of investing is borne entirely by the manufacturers. We use simulation studies to show how the retailer will lose its ability to leverage the benefits of inertial demand as consumers become more price sensitive. We also show that when inertia of the more price-sensitive customer segment increases, the aggregate welfare of consumers, the retailer, and manufacturers may increase.