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DC Field | Value | Language |
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dc.contributor.author | Akgun, U | - |
dc.contributor.author | Chioveanu, I | - |
dc.date.accessioned | 2013-01-07T14:57:41Z | - |
dc.date.available | 2013-01-07T14:57:41Z | - |
dc.date.issued | 2012 | - |
dc.identifier.citation | Economics and Finance Working Paper, Brunel University, 12-18, Sep 2012 | en_US |
dc.identifier.uri | http://bura.brunel.ac.uk/handle/2438/7096 | - |
dc.description.abstract | This paper considers the use of loyalty inducing discounts in vertical supply chains. An upstream manufacturer and a competitive fringe sell differentiated products to a retailer who has private information about the level of stochastic demand. We provide a comparison of market outcomes when the manufacturer uses two-part tariffs (2PT), all-unit quantity discounts (AU), and market share discounts (MS). We show that retailer's risk attitude affects manufacturer's preferences over these three pricing schemes. When the retailer is risk-neutral, it bears all the risk and all three schemes lead to the same outcome. When the retailer is risk-averse, 2PT performs the worst from manufacturer s perspective but it leads to the highest total surplus. For a wide range of parameter values (but not for all) the manufacturer prefers MS to AU. By limiting the retailer's product substitution possibilities MS makes the demand for manufacturer s product more inelastic. This reduces the amount (share of total profits) the manufacturer needs to leave to the retailer for the latter to participate in the scheme. | en_US |
dc.description.sponsorship | This study is funded from the Valencian Economic Research Institute (IVIE) and the European Commission. | en_US |
dc.language.iso | en | en_US |
dc.publisher | Brunel University | en_US |
dc.subject | Vertical contracts | en_US |
dc.subject | Market share discounts | en_US |
dc.subject | Asymmetric information | en_US |
dc.title | Loyalty discounts | en_US |
dc.type | Article | en_US |
pubs.organisational-data | /Brunel | - |
pubs.organisational-data | /Brunel/Brunel Active Staff | - |
pubs.organisational-data | /Brunel/Brunel Active Staff/School of Social Sciences | - |
pubs.organisational-data | /Brunel/Brunel Active Staff/School of Social Sciences/Economics and Finance | - |
Appears in Collections: | Economics and Finance Publications Dept of Economics and Finance Research Papers |
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