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The Competing Retailers Pricing Research Based on Logistic Model

In: Liss 2013

Author

Listed:
  • Chaogan Li

    (Beijing Jiaotong University)

  • Hongjie Lan

    (Beijing Jiaotong University)

Abstract

This paper analyzes the competition between two retailers with an identical supplier based on the Logistic model. As a result, a new kind of nonlinear demand function is developed with service level taken into consideration. Under the situation that price information is known to each retailer, a pricing strategy is given to the maximize revenue of the retailers, which actually simulates the “price war”. Furthermore we give a Nash equilibrium solution which is the result of price adjusting. A numerical example is conducted to survey the equilibrium prices and corresponding revenues of two retailers. Here come some interesting findings. The retailers can achieve optimal revenue simultaneously at certain service levels. And it’s proved that improving service level can bring positive externality, which is smaller than its own revenue increase.

Suggested Citation

  • Chaogan Li & Hongjie Lan, 2015. "The Competing Retailers Pricing Research Based on Logistic Model," Springer Books, in: Runtong Zhang & Zhenji Zhang & Kecheng Liu & Juliang Zhang (ed.), Liss 2013, pages 533-540, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-40660-7_79
    DOI: 10.1007/978-3-642-40660-7_79
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