Pricing in Dynamic Marketing: The Cases of Piece-Wise Constant Sale and Retail Discounts

Research output: Chapter in Book/Report/Conference proceedingConference contributionResearchpeer-review

Abstract

We consider a stylized distribution channel, where a manufacturer sells a single kind of good to a retailer. In classical setting, the profit of manufacturer is quadratic w.r.t. wholesales discount, while the profit of retailer is quadratic w.r.t. retail discount (pass-through). Thus, the wholesale prices and the retail prices are continuous. These results are elegant mathematically but not adequate economically. Therefore, we assume that wholesale discount and retail discounts are piece-wise constant. We show the strict concavity of retailer’s profits w.r.t. retail discount levels. As for the manufacturer’s profits w.r.t. wholesale discount levels, we show that strict concavity can be guaranteed only in the case when retail discount is constant and sufficiently large.

Original languageEnglish
Title of host publicationOptimization and Applications - 11th International Conference, OPTIMA 2020, Proceedings
EditorsNicholas Olenev, Yuri Evtushenko, Michael Khachay, Vlasta Malkova
PublisherSpringer Science and Business Media Deutschland GmbH
Pages27-39
Number of pages13
ISBN (Print)9783030628666
DOIs
Publication statusPublished - 2020
Event11th International Conference on Optimization and Applications, OPTIMA 2020 - Moscow, Russian Federation
Duration: 28 Sep 20202 Oct 2020

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume12422 LNCS
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Conference

Conference11th International Conference on Optimization and Applications, OPTIMA 2020
CountryRussian Federation
CityMoscow
Period28.09.202002.10.2020

Keywords

  • Concavity
  • Piece-wise constant prices
  • Retail discount
  • Retailer
  • Wholesale discount

Fingerprint

Dive into the research topics of 'Pricing in Dynamic Marketing: The Cases of Piece-Wise Constant Sale and Retail Discounts'. Together they form a unique fingerprint.

Cite this