Pricing in Oligopoly Supply Chain Based On Price Cooperation

Abstract:

The study sets up a model of a single twostaged supply chain,two sides of which are both oligarchic enterprises.The paper examines how to price the intemediate and the terminal products with the pricing cooperation between the supplier and the manufacturer,and how without the cooperation.The differences hencefore in the gross profit of the supply chain are compared.The result shows that with the pricing cooperation the rate of the increase in the profit is not only positively related to the elasticity of demand for the terminal products and to the cost of the supplier,but also negatively related to the price elasticity of demand for the supplier.Since the excess profit of the whole chain does not represent the one of an individual enterprise,the paper then follows up to probe into the excess profit,suggesting the premises for a stable supply chain cooperated on pricing.