Chopr 2nd Edition, Chapter 10.ppt.pptVIP

10-* Quantity Discounts WhenFirm Has Market Power The two stages coordinate the pricing decision p = $4, CR=2, Demand = 120,000 bottles, Profit = PM+PR=0+240,000 = $240,000 ($60,000 higher.) The SC profit is lower if each stage of the SC independently takes its pricing decisions with the objective of maximizing its own profit! M R CR p CM 物涕费枫怠糜蛇俊搁开阂永钮怪盲骡敏虐妄远斌荒斥盆间表萄捶漳府悔釜Chopra 2nd Edition, Chapter 10.pptChopra 2nd Edition, Chapter 10.ppt 10-* Pricing Schemes for Coordination: Firm has Market Power Retailer DO acts in a way to maximize its own profits. Design a two-part tariff that achieves the coordinated solution Design a volume discount scheme that achieves the coordinated solution Impact of inventory costs Pass on some fixed costs with above pricing 抨辩炊旱耶材寡桂奶鸿综作暇姑伍丈食医赎狮骂肿洛叭得身咎打效朱尊俩Chopra 2nd Edition, Chapter 10.pptChopra 2nd Edition, Chapter 10.ppt 10-* Two Part Tariff Manufacturer charges his entire profit as an up-front franchise fee and then sells the retailer at cost. It is then optimal for the retailer to price as though the two stages are coordinated. Ex: With coordination SC Profit=$240,000 Without Coordination PR=$60,000 Manufacturer charges up-front fee of $180,000 and set CR=2. Retailer maximizes PR when p=$4/bottle and his net profit is $240,000-$180,000=$60,000. 粉蹋戍峰胁及唐磨柬蛊淡吵除米旭痴框匡褒统饿鞍儿肚器貌胜支蒲蔗鳞喳Chopra 2nd Edition, Chapter 10.pptChopra 2nd Edition, Chapter 10.ppt 10-* Volume Based Quantity Discount Two part tariff is actually a volume based quantity discount. Here the objective is to price in a way that the retailer buys the total volume sold as if the two stages coordinate pricing. Ex: With coordination demand=$120,000 bottles /year. Manufacturer offers Then it is optimal for DO to order 120,000 units at set p=$4/unit. So, PR= $60,000, PM= $180,000 and SC Profit=$240,000. 崇巷斑笨菠苟傣悲楔棒决恿跃恍宝卧驻财犊旷颖窜绣蛰玛颐龋炔沂糟恳弧Chopra 2nd Edition, Chapter 10.pptChopra 2nd Edition, Chapter 10.ppt 10-* Lessons from Discounting Schemes For c