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Optimal Pricing Strategies Modeling for Competitive Dual-Channel Networks Considering the Effects of Reference Price and Sustainability
  • Ashkan Teymouri,
  • Hadi Sahebi,
  • Yahya Ranjbar
Ashkan Teymouri
University of California Davis Department of Civil and Environmental Engineering

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Hadi Sahebi
Iran University of Science and Technology
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Yahya Ranjbar
Iran University of Science and Technology
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Abstract

The present study addresses the effects of reference price on various competitive dual-channel collecting (CDCC) structures to select the proper reverse channel for collecting products used. To this end, we develop three price optimization models, including manufacturer and retailer competitive collecting (M-R model), retailer and third-party competitive collecting (R-3P model), and finally, manufacturer and third-party competitive collecting (M-3P model). The optimal pricing and collection decisions are made in all the models based on the reference price. The results showed that the M-R model was the best and most effective structure in terms of the market price, collection rate, and network total profit. The developed decision optimization models benefit the game theory approach, especially Stackelberg game modelling, to guarantee the equilibrium condition of network players. To examine the effects of reference price on equilibrium decisions, we compare the optimal conditions obtained by the mentioned models with the lack of reference price situation. The result indicates that the wholesale price, retail price, manufacturer and retailer profit, as well as network total profit, are larger in dual-channel collection models without reference price. However, the collection rate of the collector agent, total collection rate and third-party collector profit increase in the presence of reference price. Conclusionally, in the situations that sustainability considerations are a serious concern, models that consider the reference price are preferable. Finally, sensitivity analyses are conducted to validate the performance and applicability of the proposed price optimization models.