Equilibrium analysis of retailing modes of high timeliness merchandise

Abstract

This paper addresses pricing decisions of high timeliness merchandise under dynamic uncertainty as well as investigating the optimal retailing mode of such merchandise. Three dual channel structures, namely, the posted-price retail distribution channel, online direct distribution channel, and Name Your Own Price (NYOP) distribution channel, should be considered. This paper develops the aggregate demand function based on consumer utility theory and analyzes the equilibrium pricing strategy and profits under different channel structures to determine whether the supplier should introduce online direct distribution channel or NYOP distribution channel. The results show that using the dual channel with posted-price retailer and NYOP retailer would be more profitable.