Game-Theoretic Approach for Pricing Decisions in Dual-Channel Supply Chain

Abstract

In the current study, a dual-channel supply chain is considered containing one manufacturer and two retailers. It is assumed that the manufacturer and retailers have the same decision powers. A game-theoretic approach is developed to analyze pricing decisions under the centralized and decentralized scenarios. First, the Nash model is established to obtain the equilibrium decisions in the decentralized case. Then, the centralized model is developed to maximize the total profit of the whole system. Finally, the equilibrium decisions are discussed and some managerial insights are revealed. 

Keywords

• E-commerce
• Supply chain management
• Dual-channel structure
• Game theory
• Nash equilibrium
• Centralized model.