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A dynamic game with monopolist manufacturer and price-competing duopolist retailers

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Abstract

The paper considers a dynamic game with a single manufacturer who supplies two retailers. The manufacturer determines his production rate of a specific product, the rate of quality improvement efforts as well as the rate of advertising for the product. Each retailer controls her purchasing rate and the consumer sales price. Payments from a retailer to the manufacturer are determined by a wholesale price or a revenue-sharing scheme. The retailers operate in the same consumer market in which they compete in prices for the consumer demand. Nash equilibrium conditions are derived and numerical methods are employed to characterize equilibrium behavior of the players in a differential game of fixed and finite duration.

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Authors and Affiliations

  1. Department of Operations Management, ESSEC Business School, Avenue Bernard Hirsch, B.P. 105, 95021, Cergy Pontoise, France

    Fouad El Ouardighi

  2. Department of Business and Economics, University of Southern Denmark, Campusvej 55, 5230, Odense, Denmark

    Steffen Jørgensen

  3. Department of Logistics and Operations Management, HEC Montreal, 3000 Chemin de la Côte-Sainte-Catherine, Montréal, QC, H3T 2A7, Canada

    Federico Pasin

Authors
  1. Fouad El Ouardighi
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  2. Steffen Jørgensen
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  3. Federico Pasin
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Corresponding author

Correspondence to Fouad El Ouardighi.

Additional information

The authors acknowledge valuable and constructive comments from two referees and the associate editor. The paper was completed while the first author was visiting HEC-Montreal in Canada.

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Ouardighi, F.E., Jørgensen, S. & Pasin, F. A dynamic game with monopolist manufacturer and price-competing duopolist retailers. OR Spectrum 35, 1059–1084 (2013). https://doi.org/10.1007/s00291-012-0300-9

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  • DOI: https://doi.org/10.1007/s00291-012-0300-9

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