Research Article

Two-period pricing strategies in a two-echelon supply chain with conspicuous consumption

School of Management, Tianjin Normal University, Tianjin 300387, P.R. China

^* Corresponding author: msxue@tju.edu.cn

Received: 24 January 2018
Accepted: 27 June 2018

Abstract

This paper investigates the problem of pricing strategies in a two-echelon supply chain with conspicuous consumers. We develop a two-period pricing model for the supply chain which is consisted of one manufacturer and one retailer who involve in trading a single product. The manufacturer being a Stackelberg leader, decides the wholesale price, the retailer acts as a follower and sets the selling price. As a leader, the manufacturer has two pricing options: (1) sets a common wholesale price for the entire selling season; (2) sets two different wholesale prices for the two selling periods respectively. Based on the manufacturer’s pricing options, we develop four pricing cases considering the effect of conspicuous consumption and compare the equilibrium outcomes. In addition, we study the impacts of the main parameters on the equilibrium results under different cases in the numerical study and obtain some managerial insights.