Pricing Order Strategy of Duopoly Retailers Based on Degree of Product Substitution

Abstract:

Aiming at the duopoly competition model of a dual channel retailer and a pure online retailer, This paper establishes demand model and profit model respectively. The results show that the pricing order affects the retailer’s profit and delaying the pricing time will gain more profit. At the same time, we also analyze the influence of the products substitution on the profit, price and sales volume. Under the condition of mature channels and products, the higher the degree of substitution is, the higher the profit, price and sales volume are. When the degree of product substitution is large, retailers are not only competitive but also complementary. At this point, retailers should strengthen cooperation to drive the growth of the overall market.