IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v200y2010i3p926-928.html
   My bibliography  Save this article

A note on the effects of downstream efficiency on upstream pricing

Author

Listed:
  • Koulamas, Christos
  • Kyparisis, George J

Abstract

The study of the effects of downstream entry on upstream pricing has revealed the counter-intuitive result of the supplier's pricing policy being invariant to a new downstream entry under an isoelastic inverse demand function. We show that this counter-intuitive result is reversed when a new downstream entry affects downstream efficiency. We show that in the presence of increased post-entry downstream efficiency the supplier increases the wholesale price by taking advantage of the increased retail efficiency and competition. We also investigate the applicability of our results under other types of inverse demand functions.

Suggested Citation

  • Koulamas, Christos & Kyparisis, George J, 2010. "A note on the effects of downstream efficiency on upstream pricing," European Journal of Operational Research, Elsevier, vol. 200(3), pages 926-928, February.
    • Handle: RePEc:eee:ejores:v:200:y:2010:i:3:p:926-928
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377-2217(09)00111-8
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rajeev K. Tyagi, 1999. "On the Effects of Downstream Entry," Management Science, INFORMS, vol. 45(1), pages 59-73, January.
    2. Greenhut, M L & Ohta, H, 1976. "Related Market Conditions and Interindustrial Mergers," American Economic Review, American Economic Association, vol. 66(3), pages 267-277, June.
    3. Chakravarthi Narasimhan & Z. John Zhang, 2000. "Market Entry Strategy Under Firm Heterogeneity and Asymmetric Payoffs," Marketing Science, INFORMS, vol. 19(4), pages 313-327, November.
    4. Venkatesh Shankar, 1997. "Pioneers' Marketing Mix Reactions to Entry in Different Competitive Game Structures: Theoretical Analysis and Empirical Illustration," Marketing Science, INFORMS, vol. 16(3), pages 271-293.
    5. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
    6. Douglas Bowman & Hubert Gatignon, 1996. "Order of Entry as a Moderator of the Effect of the Marketing Mix on Market Share," Marketing Science, INFORMS, vol. 15(3), pages 222-242.
    7. Charles J. Corbett & Uday S. Karmarkar, 2001. "Competition and Structure in Serial Supply Chains with Deterministic Demand," Management Science, INFORMS, vol. 47(7), pages 966-978, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cao, Zong-Hong & Zhou, Yong-Wu & Zhao, Ju & Li, Chang-Wen, 2015. "Entry mode selection and its impact on an incumbent supply chain coordination," Journal of Retailing and Consumer Services, Elsevier, vol. 26(C), pages 1-13.
    2. Arya, Anil & Mittendorf, Brian, 2013. "Discretionary disclosure in the presence of dual distribution channels," Journal of Accounting and Economics, Elsevier, vol. 55(2), pages 168-182.
    3. Liu, Guanmei & Shao, Xiaofeng & Lang, Xiao, 2020. "On the interaction of technology upgrade and buyer entry in a supply chain," International Journal of Production Economics, Elsevier, vol. 221(C).
    4. Yenipazarli, Arda, 2021. "Downstream entry revisited: Economic effects of entry in vertically-related markets," Omega, Elsevier, vol. 103(C).
    5. Debasmita Basak & Arijit Mukherjee, 2021. "Competition, External Economies of Scale, and Unionized Wage," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 585-592, December.
    6. Ioannis N. Pinopoulos, 2014. "A note on the effects of downstream free entry on wholesale pricing," Discussion Paper Series 2014_05, Department of Economics, University of Macedonia, revised Sep 2014.
    7. Liu, Guanmei & Wang, Haijun & Shao, Xiaofeng, 2023. "Technology investments into a supplier with upstream entry," European Journal of Operational Research, Elsevier, vol. 305(1), pages 240-259.
    8. Glock, Christoph H. & Kim, Taebok, 2015. "The effect of forward integration on a single-vendor–multi-retailer supply chain under retailer competition," International Journal of Production Economics, Elsevier, vol. 164(C), pages 179-192.
    9. Wu, Jie & Lu, Wei & Ji, Xiang, 2023. "The interactions between upstream quality disclosure and downstream entry," European Journal of Operational Research, Elsevier, vol. 309(2), pages 545-559.
    10. Kittaka, Yuta & Pan, Cong, 2023. "The bright side of outside market entry with manufacturer encroachment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Debasmita Basak & Arijit Mukherjee, 2021. "Competition, External Economies of Scale, and Unionized Wage," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 585-592, December.
    2. Beladi, Hamid & Mukherjee, Arijit, 2012. "Market structure and strategic bi-sourcing," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 210-219.
    3. Cao, Zong-Hong & Zhou, Yong-Wu & Zhao, Ju & Li, Chang-Wen, 2015. "Entry mode selection and its impact on an incumbent supply chain coordination," Journal of Retailing and Consumer Services, Elsevier, vol. 26(C), pages 1-13.
    4. Xin Yun & Hao Liu & Yi Li & Kin Keung Lai, 2023. "Contract design under asymmetric demand information for sustainable supply chain practices," Annals of Operations Research, Springer, vol. 324(1), pages 1429-1459, May.
    5. Arijit Mukherjee, 2007. "Note on a generalized wage rigidity result," Economics Bulletin, AccessEcon, vol. 10(12), pages 1-9.
    6. Ioannis N. Pinopoulos, 2014. "A note on the effects of downstream free entry on wholesale pricing," Discussion Paper Series 2014_05, Department of Economics, University of Macedonia, revised Sep 2014.
    7. Nikolaeva Ralitza & Kalwani Manohar U & Robinson William T & Sriram S., 2009. "Survival Determinants for Online Retailers," Review of Marketing Science, De Gruyter, vol. 7(1), pages 1-23, February.
    8. Durand, Rodolphe & Coeurderoy, Regis, 2001. "Age, order of entry, strategic orientation, and organizational performance," Journal of Business Venturing, Elsevier, vol. 16(5), pages 471-494, September.
    9. Liu, Guanmei & Shao, Xiaofeng & Lang, Xiao, 2020. "On the interaction of technology upgrade and buyer entry in a supply chain," International Journal of Production Economics, Elsevier, vol. 221(C).
    10. Özelkan, Ertunga C. & ÇakanyIldIrIm, Metin, 2009. "Reverse bullwhip effect in pricing," European Journal of Operational Research, Elsevier, vol. 192(1), pages 302-312, January.
    11. Soo-Haeng Cho, 2014. "Horizontal Mergers in Multitier Decentralized Supply Chains," Management Science, INFORMS, vol. 60(2), pages 356-379, February.
    12. Arijit Mukherjee & Udo Broll & Soma Mukherjee, 2009. "The welfare effects of entry: the role of the input market," Journal of Economics, Springer, vol. 98(3), pages 189-201, December.
    13. Pinopoulos, Ioannis N., 2011. "Input pricing by an upstream monopolist into imperfectly competitive downstream markets," Research in Economics, Elsevier, vol. 65(3), pages 144-151, September.
    14. Arya, Anil & Mittendorf, Brian, 2013. "Discretionary disclosure in the presence of dual distribution channels," Journal of Accounting and Economics, Elsevier, vol. 55(2), pages 168-182.
    15. Wu, Jie & Lu, Wei & Ji, Xiang, 2023. "The interactions between upstream quality disclosure and downstream entry," European Journal of Operational Research, Elsevier, vol. 309(2), pages 545-559.
    16. Jonathan D. Bohlmann & Peter N. Golder & Debanjan Mitra, 2002. "Deconstructing the Pioneer's Advantage: Examining Vintage Effects and Consumer Valuations of Quality and Variety," Management Science, INFORMS, vol. 48(9), pages 1175-1195, September.
    17. John Hauser & Gerard J. Tellis & Abbie Griffin, 2006. "Research on Innovation: A Review and Agenda for," Marketing Science, INFORMS, vol. 25(6), pages 687-717, 11-12.
    18. Yenipazarli, Arda, 2021. "Downstream entry revisited: Economic effects of entry in vertically-related markets," Omega, Elsevier, vol. 103(C).
    19. C. Gizem Korpeoglu & Ersin Körpeoğlu & Soo-Haeng Cho, 2020. "Supply Chain Competition: A Market Game Approach," Management Science, INFORMS, vol. 66(12), pages 5648-5664, December.
    20. Ertunga Özelkan & Churlzu Lim, 2008. "Conditions of reverse bullwhip effect in pricing for price-sensitive demand functions," Annals of Operations Research, Springer, vol. 164(1), pages 211-227, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:200:y:2010:i:3:p:926-928. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.