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Joint Innovation Investment and Pricing Decisions in Retail Supply Chains with Customer Value

Author

Listed:
  • Jiali Qu

    (School of Management, Xihua University, Chengdu 611731, China)

  • Benyong Hu

    (School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 610039, China)

  • Chao Meng

    (School of Marketing, University of Southern Mississippi, Hattiesburg, MS 39406, USA)

Abstract

In the retail industry, customer value has become the key to maintaining competitive advantages. In the era of new retail, customer value is not only affected by the product price, but it is also closely related to innovations, such as value-added services and unique business models. In this paper, we study the joint innovation investment and pricing decisions in a retailer–supplier supply chain based on revenue sharing contracts and customer value. We first find that, in the non-cooperative game, equilibrium only exists in the supplier Stackelberg game. However, revenue sharing contracts cannot coordinate the supply chain in the non-cooperative game. By considering supply chain members’ bargaining power, we find that there exists a unique equilibrium for the Nash bargaining product. In addition, revenue sharing contracts can coordinate the supply chain and achieve the optimal consumer surplus. When the supply chain is coordinated, supply chain profit is allocated to the supply chain members based on their bargaining powers.

Suggested Citation

  • Jiali Qu & Benyong Hu & Chao Meng, 2021. "Joint Innovation Investment and Pricing Decisions in Retail Supply Chains with Customer Value," Sustainability, MDPI, vol. 13(3), pages 1-14, January.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:3:p:1309-:d:487776
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    References listed on IDEAS

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