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Pricing decisions in a carrier–retailer channel under price-sensitive demand and contract-carriage with common-carriage option

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  • Mutlu, Fatih
  • Çetinkaya, Sıla

Abstract

We study a carrier–retailer channel and examine the profitability of the centralized and decentralized channels under price-sensitive demand. In the centralized channel, the problem is to set the retail price that maximizes the total channel profit, whereas in the decentralized channel the individual channel members set their own pricing policy parameters to maximize individual profits in a Stackelberg game. We show that a linear price contract between the carrier and the retailer could lead to channel coordination through a win–win solution. We also show that it is profitable for the retailer to exploit common-carriage complementary to the use of contract carriage.

Suggested Citation

  • Mutlu, Fatih & Çetinkaya, Sıla, 2013. "Pricing decisions in a carrier–retailer channel under price-sensitive demand and contract-carriage with common-carriage option," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 51(C), pages 28-40.
    • Handle: RePEc:eee:transe:v:51:y:2013:i:c:p:28-40
    DOI: 10.1016/j.tre.2012.12.003
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    References listed on IDEAS

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    Cited by:

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    5. Ke, Ginger Y. & Bookbinder, James H., 2018. "Coordinating the discount policies for retailer, wholesaler, and less-than-truckload carrier under price-sensitive demand: A tri-level optimization approach," International Journal of Production Economics, Elsevier, vol. 196(C), pages 82-100.

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