Strategic Analysis of the Pricing Mechanisms in an Online Book Supply Chain in the Presence of Reference Price Effects
(1) Background: A binding recommended retail price has been used in several markets in a variety of forms, and the book market is a typical example. Publishers sell books to online retailers at a unit wholesale discount computed on the cover price. Retailers are then allowed to set the retail price....
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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MDPI AG
2021-05-01
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| Series: | Journal of Theoretical and Applied Electronic Commerce Research |
| Subjects: | |
| Online Access: | https://www.mdpi.com/0718-1876/16/5/84 |
| _version_ | 1797520734380097536 |
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| author | Wenhua Hou Yuwen Zeng |
| author_facet | Wenhua Hou Yuwen Zeng |
| author_sort | Wenhua Hou |
| collection | DOAJ |
| description | (1) Background: A binding recommended retail price has been used in several markets in a variety of forms, and the book market is a typical example. Publishers sell books to online retailers at a unit wholesale discount computed on the cover price. Retailers are then allowed to set the retail price. Therefore, if consumers regard the cover prices as reference points, then they may be more likely to purchase books if retail prices are lower than the cover prices. (2) Methods: We develop a Stackelberg game model for a book supply chain to investigates how reference price effects affect retailers and publisher’s pricing strategies. (3) Results: The results show that retailers will sell printed books at a discount only when the publisher’s wholesale discount rate is not high. Further, as the intensity of the reference price effects increases, (a) the lower boundary of the wholesale discount rate rises, (b) publishers’ profits increase and (c) retailers’ profits increase relative to the level of consumers’ e-books acceptance. (4) Conclusions: This result is related to the fact that the online retailer, such as Amazon and JD.com, like to invoke reference price effects in consumers’ minds by highlighting the printed book’s discount rate. |
| first_indexed | 2024-03-10T08:00:49Z |
| format | Article |
| id | doaj.art-34a2990846be49cb97d7b36a15bcd516 |
| institution | Directory Open Access Journal |
| issn | 0718-1876 |
| language | English |
| last_indexed | 2024-03-10T08:00:49Z |
| publishDate | 2021-05-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Journal of Theoretical and Applied Electronic Commerce Research |
| spelling | doaj.art-34a2990846be49cb97d7b36a15bcd5162023-11-22T11:29:39ZengMDPI AGJournal of Theoretical and Applied Electronic Commerce Research0718-18762021-05-011651492151610.3390/jtaer16050084Strategic Analysis of the Pricing Mechanisms in an Online Book Supply Chain in the Presence of Reference Price EffectsWenhua Hou0Yuwen Zeng1Business School, Nankai University, Tianjin 300071, ChinaBusiness School, Nankai University, Tianjin 300071, China(1) Background: A binding recommended retail price has been used in several markets in a variety of forms, and the book market is a typical example. Publishers sell books to online retailers at a unit wholesale discount computed on the cover price. Retailers are then allowed to set the retail price. Therefore, if consumers regard the cover prices as reference points, then they may be more likely to purchase books if retail prices are lower than the cover prices. (2) Methods: We develop a Stackelberg game model for a book supply chain to investigates how reference price effects affect retailers and publisher’s pricing strategies. (3) Results: The results show that retailers will sell printed books at a discount only when the publisher’s wholesale discount rate is not high. Further, as the intensity of the reference price effects increases, (a) the lower boundary of the wholesale discount rate rises, (b) publishers’ profits increase and (c) retailers’ profits increase relative to the level of consumers’ e-books acceptance. (4) Conclusions: This result is related to the fact that the online retailer, such as Amazon and JD.com, like to invoke reference price effects in consumers’ minds by highlighting the printed book’s discount rate.https://www.mdpi.com/0718-1876/16/5/84reference pricespricingmulti-channel supply chainonline book market |
| spellingShingle | Wenhua Hou Yuwen Zeng Strategic Analysis of the Pricing Mechanisms in an Online Book Supply Chain in the Presence of Reference Price Effects Journal of Theoretical and Applied Electronic Commerce Research reference prices pricing multi-channel supply chain online book market |
| title | Strategic Analysis of the Pricing Mechanisms in an Online Book Supply Chain in the Presence of Reference Price Effects |
| title_full | Strategic Analysis of the Pricing Mechanisms in an Online Book Supply Chain in the Presence of Reference Price Effects |
| title_fullStr | Strategic Analysis of the Pricing Mechanisms in an Online Book Supply Chain in the Presence of Reference Price Effects |
| title_full_unstemmed | Strategic Analysis of the Pricing Mechanisms in an Online Book Supply Chain in the Presence of Reference Price Effects |
| title_short | Strategic Analysis of the Pricing Mechanisms in an Online Book Supply Chain in the Presence of Reference Price Effects |
| title_sort | strategic analysis of the pricing mechanisms in an online book supply chain in the presence of reference price effects |
| topic | reference prices pricing multi-channel supply chain online book market |
| url | https://www.mdpi.com/0718-1876/16/5/84 |
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