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Joint pricing and replenishment policies for risk‐averse retailers under duopolistic competition

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  • Zhen Zhang
  • Songtao Zhang
  • Mingshi Yue

Abstract

This study investigates the coordination of pricing and inventory replenishment under retail competition. Although conventional wisdom suggests that a retailer follow conservative operating strategies when the competing retailer adopts a markdown strategy, the retailer may actually raise its price (order) if its operational costs are sufficiently high (low) and its competitor's price is relatively low. If the retailer is more risk averse, its pricing and replenishment decisions hinge highly on its risk aversion level and its competitor's current price. The increase of the wholesale price always hurts the retailers and may even hurt the manufacturer if it is exorbitant.

Suggested Citation

  • Zhen Zhang & Songtao Zhang & Mingshi Yue, 2021. "Joint pricing and replenishment policies for risk‐averse retailers under duopolistic competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1849-1864, October.
    • Handle: RePEc:wly:mgtdec:v:42:y:2021:i:7:p:1849-1864
    DOI: 10.1002/mde.3350
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    Cited by:

    1. Samuel N. Kirshner & Zhaolin Li, 2022. "Supply chain contracting with competing regretful retailers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2196-2211, September.

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