IDEAS home Printed from https://ideas.repec.org/a/spr/jcomop/vyid10.1007_s10878-020-00625-w.html
   My bibliography  Save this article

The effects of price subsidy and fairness concern on pricing and benefits of take-away supply chain

Author

Listed:
  • Hui Zhang

    (Fujian Agriculture and Forestry University)

  • Kai Luo

    (Fujian Agriculture and Forestry University)

  • Guanqun Ni

    (Fujian Agriculture and Forestry University)

Abstract

In this paper, from the perspective of game theory, we study the impact of price subsidy and fairness concern on the pricing strategies and benefits of members in the take-away industry. In the single-channel supply chain, we build a Stackelberg game model between the take-away platform and the restaurant for the online take-away business. By comparing and analyzing the product pricing and revenue in the cases of no price subsidy and price subsidy, we obtain the optimal pricing strategy for both parties. In the dual-channel supply chain, we explore the benefits of supply chain members under the combined effects of fairness concern and price subsidy. Under the single channel price subsidy model, we find that restaurant always raises prices, and the price increase is directly proportional to the subsidy intensity. Such a proper price increase always brings more benefits to both parties. Under the dual-channel model, consumer fairness concern may curb the price increase behavior of restaurants. Regardless of the model, in the long term, the optimal subsidy of the platform will decrease with the expansion of the online take-away market.

Suggested Citation

  • Hui Zhang & Kai Luo & Guanqun Ni, 0. "The effects of price subsidy and fairness concern on pricing and benefits of take-away supply chain," Journal of Combinatorial Optimization, Springer, vol. 0, pages 1-19.
    • Handle: RePEc:spr:jcomop:v::y::i::d:10.1007_s10878-020-00625-w
    DOI: 10.1007/s10878-020-00625-w
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10878-020-00625-w
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10878-020-00625-w?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Ma, Wei-min & Zhao, Zhang & Ke, Hua, 2013. "Dual-channel closed-loop supply chain with government consumption-subsidy," European Journal of Operational Research, Elsevier, vol. 226(2), pages 221-227.
    2. Caillaud, Bernard & Jullien, Bruno, 2003. "Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-328, Summer.
    3. (Catherine) Zhang, Jie & Savage, Scott J. & Chen, Yongmin, 2015. "Consumer uncertainty and price discrimination through online coupons: An empirical study of restaurants in Shanghai," Information Economics and Policy, Elsevier, vol. 33(C), pages 43-55.
    4. Tony Haitao Cui & Jagmohan S. Raju & Z. John Zhang, 2007. "Fairness and Channel Coordination," Management Science, INFORMS, vol. 53(8), pages 1303-1314, August.
    5. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    6. Chenshuo Li & Zhe Huang, 2019. "Subsidy strategy of pharmaceutical e-commerce platform based on two-sided market theory," PLOS ONE, Public Library of Science, vol. 14(10), pages 1-15, October.
    7. Nie, Tengfei & Du, Shaofu, 2017. "Dual-fairness supply chain with quantity discount contracts," European Journal of Operational Research, Elsevier, vol. 258(2), pages 491-500.
    8. Xiabing Zheng & Xiaolong Guo, 2016. "E-retailing of restaurant services: pricing strategies in a competing online environment," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(11), pages 1408-1418, November.
    9. Mai, Feng & Fry, Michael J. & Raturi, Amitabh S., 2016. "Supply-chain performance anomalies: Fairness concerns under private cost informationAuthor-Name: Qin, Fei," European Journal of Operational Research, Elsevier, vol. 252(1), pages 170-182.
    10. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    11. Zelong Yi & Yulan Wang & Yun Liu & Ying†Ju Chen, 2018. "The Impact of Consumer Fairness Seeking on Distribution Channel Selection: Direct Selling vs. Agent Selling," Production and Operations Management, Production and Operations Management Society, vol. 27(6), pages 1148-1167, June.
    12. Kurata, Hisashi & Yao, Dong-Qing & Liu, John J., 2007. "Pricing policies under direct vs. indirect channel competition and national vs. store brand competition," European Journal of Operational Research, Elsevier, vol. 180(1), pages 262-281, 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. Peng Zhang & Sisi Ju & Hongfu Huang, 2022. "Can a Restaurant Benefit from Joining an Online Take-Out Platform?," Mathematics, MDPI, vol. 10(9), pages 1-17, April.

    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. Hui Zhang & Kai Luo & Guanqun Ni, 2022. "The effects of price subsidy and fairness concern on pricing and benefits of take-away supply chain," Journal of Combinatorial Optimization, Springer, vol. 43(5), pages 1106-1124, July.
    2. Li, Zhong-Ping & Wang, Jian-Jun & Perera, Sandun & Shi, Jim (Junmin), 2022. "Coordination of a supply chain with Nash bargaining fairness concerns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 159(C).
    3. Amelio, Andrea & Giardino-Karlinger, Liliane & Valletti, Tommaso, 2020. "Exclusionary pricing in two-sided markets," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    4. Moraga-Gonzalez, Jose L. & Wildenbeest, Matthijs R., 2011. "Comparison sites," IESE Research Papers D/933, IESE Business School.
      • Jose Luis Moraga-Gonzalez & Matthijs R. Wildenbeest, 2011. "Comparison Sites," Working Papers 2011-04, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    5. Chen, Ying-Ju & Zenou, Yves & Zhou, Junjie, 2022. "The impact of network topology and market structure on pricing," Journal of Economic Theory, Elsevier, vol. 204(C).
    6. Amit Kumar Bardhan & Saad Ashraf, 2024. "More buyers or more sellers: on marketing resource allocation strategies of competing two-sided platforms," Electronic Commerce Research, Springer, vol. 24(4), pages 2579-2608, December.
    7. Jonathan Levin, 2011. "The Economics of Internet Markets," Discussion Papers 10-018, Stanford Institute for Economic Policy Research.
    8. Paul Belleflamme & Eric Toulemonde, 2009. "Negative Intra-Group Externalities In Two-Sided Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 245-272, February.
    9. Carrillo, Juan D. & Tan, Guofu, 2021. "Platform competition with complementary products," International Journal of Industrial Organization, Elsevier, vol. 77(C).
    10. Charles Angelucci & Julia Cagé & Michael Sinkinson, 2024. "Media Competition and News Diets," American Economic Journal: Microeconomics, American Economic Association, vol. 16(2), pages 62-102, May.
    11. Charles Angelucci & Julia Cagé, 2019. "Newspapers in Times of Low Advertising Revenues," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 319-364, August.
    12. Jullien, Bruno & Sand-Zantman, Wilfried, 2021. "The Economics of Platforms: A Theory Guide for Competition Policy," Information Economics and Policy, Elsevier, vol. 54(C).
    13. Jabbour, Chady & Rey-Valette, Hélène & Maurel, Pierre & Salles, Jean-Michel, 2019. "Spatial data infrastructure management: A two-sided market approach for strategic reflections," International Journal of Information Management, Elsevier, vol. 45(C), pages 69-82.
    14. Wilfred Amaldoss & Jinzhao Du & Woochoel Shin, 2021. "Media Platforms’ Content Provision Strategies and Sources of Profits," Marketing Science, INFORMS, vol. 40(3), pages 527-547, May.
    15. Yannis Bakos & Hanna Halaburda, 2020. "Platform Competition with Multihoming on Both Sides: Subsidize or Not?," Management Science, INFORMS, vol. 66(12), pages 5599-5607, December.
    16. Jay Pil Choi & Byung‐Cheol Kim, 2010. "Net neutrality and investment incentives," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 446-471, September.
    17. Galeotti, Andrea & Moraga-González, José Luis, 2009. "Platform intermediation in a market for differentiated products," European Economic Review, Elsevier, vol. 53(4), pages 417-428, May.
    18. Oliver Budzinski & Janina Satzer, 2011. "Sports Business and Multisided Markets: Towards a New Analytical Framework? (Long Version)," Working Papers 1104, International Association of Sports Economists;North American Association of Sports Economists.
    19. Martin Peitz, 2006. "Marktplätze und indirekte Netzwerkeffekte," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(3), pages 317-333, August.
    20. Jay Pil Choi, 2010. "Tying In Two‐Sided Markets With Multi‐Homing," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 607-626, September.

    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:spr:jcomop:v::y::i::d:10.1007_s10878-020-00625-w. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.