The Experts below are selected from a list of 360 Experts worldwide ranked by ideXlab platform
Eunkyu Lee - One of the best experts on this subject based on the ideXlab platform.
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effect of store brand introduction on channel Price Leadership an empirical investigation
Journal of Retailing, 2017Co-Authors: Hwan Chung, Eunkyu LeeAbstract:Abstract In this study, we conduct an empirical investigation of the impact of store brand introductions on the Price Leadership relations in a distribution channel between a retailer and national brand manufacturers. We analyze a multi-product category retail database from a major grocery chain, which captures both a period before and a period after the introduction of a store brand in each product category. By applying the time series approach to this data set, we show that store brand introductions frequently lead to Price Leadership changes, generally in a more favorable direction for the retailer than for the national brand manufacturer, evidenced by either the decay of the manufacturers’ Price Leadership or the rise of the retailer’s Price Leadership. However, such a change is not universal but tends to be concentrated among a certain quality tier of national brands, which is not always the low-tier, but sometimes the top-tier despite the low-Price low-quality position of the store brand. The patterns detected in the data suggest that these changes are likely to reflect the retailer’s strategic effort to reshape the Price Leadership environment in a product category aided by the enhanced bargaining power and managerial sophistication that accompanied the store brand introductions.
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asymmetric relationships with symmetric suppliers strategic choice of supply chain Price Leadership in a competitive market
European Journal of Operational Research, 2017Co-Authors: Hwan Chung, Eunkyu LeeAbstract:Abstract This study investigates a supply chain member's strategic choice between Price Leadership and Price followership against each of its supply chain partners. In particular, our investigation focuses on whether a retailer ever has an incentive to have asymmetric Price Leadership types across multiple suppliers even in the absence of asymmetry across them in demand, cost, and competitive pricing behavior. By analyzing a game-theoretic model composed of two manufacturers and one common retailer, we show that the retailer does not always prefer Price Leadership over a manufacturer, and that the retailer's strategic choice over Price Leadership with one manufacturer depends upon its Price Leadership type with the competing manufacturer and the degree of product substitutability. Surprisingly, although the competing manufacturers are completely symmetric in demand and cost characteristics, if the retailer does not have Price Leadership over one manufacturer, it prefers being a Price leader over the other manufacturer when the product substitutability is sufficiently low, resulting in an asymmetric Price Leadership despite no asymmetry between the manufacturers. On the other hand, higher degrees of product substitutability lead the retailer to choose not to seek Price Leadership against either manufacturer. In contrast, each manufacturer always finds it profitable to be a Price leader over the retailer, regardless of product substitutability and the Price Leadership situation between the retailer and the competing manufacturer. These strategic choices over vertical Price Leadership reflect interesting interplays of product positioning, the supply chain members’ pricing objectives, and their foresights of other supply chain members’ pricing behavior.
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vertical strategic interaction implications for channel pricing strategy
Marketing Science, 1997Co-Authors: Eunkyu Lee, Richard StaelinAbstract:This paper examines two strategic pricing decisions within channels: using foresight i.e., Price Leadership and considering category implications i.e., product line pricing. Are Price Leadership and product line pricing always the best pricing strategies for a channel member? If not, when does this occur and why? By investigating these questions, we address some major concerns of both marketing practitioners and scholars interested in channel management issues. In addition, this study provides an indepth discussion on why previous analytic studies produced answers to these questions that depend upon the choice of the form of demand functions. As such, this study should significantly resolve the debate among analytic marketing modelers about the “right” demand specification. At the core of our discussion lies the concept of vertical strategic interaction, which is defined in terms of the direction of a channel member's reaction to the actions of its channel partner within a given demand structure. Specifically, if a channel member's best reaction is to reduce its margin when its channel partner increases its margin, the type of vertical strategic interaction is referred to as vertical strategic substitutability VSS. If the best reaction is to increase the margin, the environment is referred to as vertical strategic complementarity VSC. If the best reaction is no margin change, it is referred to as vertical strategic independence VSI. Using a game theoretic approach, we demonstrate that these three types of vertical strategic interactions represent a key driving force for optimal decisions on channel Price Leadership and product line pricing. Our investigation involves mathematical analyses of an industry model composed of two manufacturers selling competing products, both carried by two competing retailers. As such, the model allows for retailer product line pricing as well as manufacturer and retailer level competition. In addition, this general model can be used to analyze three more restrictive industry settings often found in the channels literature, i.e., a bilateral monopoly Jeuland and Shugan [Jeuland, Abel, Steven M. Shugan. 1983. Managing channel profits. Marketing Sci.2Summer 239--72.], two competing manufacturers selling through competing franchised retailers McGuire and Staelin [McGuire, Timothy W., Richard Staelin. 1983. An industry equilibrium analysis of downstream vertical integration. Marketing Sci.2Spring 161--92.], and two competing manufacturers selling through one common retailer using product line pricing Choi [Choi, S. Chan. 1991. Price competition in a channel structure with a common retailer. Marketing Sci.10Fall 271--96.]. Unlike many other channel studies, most of our analyses are performed without assuming particular functional forms of demand curves. Thus, this paper provides greater assurance that the insights from this stream of research are broadly applicable, not only across industry structures but also across demand conditions. The paper starts out by defining three different rules for how Prices are set: The manufacturer uses foresight, the retailer uses foresight, and neither channel member uses foresight. We then show a one-to-one mapping between the type of vertical strategic interaction and the optimality of channel Price Leadership. Specifically, a channel member finds it profitable to be a Price leader for VSS but prefers to be a follower for VSC. For VSI, channel members are indifferent to the channel Price Leadership issue, as it has no effect on channel member profits. We also show that there exist conditions under which a retailer might see a reduction in profits when it changes its policy from non-product line pricing to product line pricing. Such conditions arise when the retailer is not a Price leader and the environment is characterized by VSS or VSC. At a more general level, this study suggests not only the value but also the cost to a firm for using superior knowledge i.e., foresight and/or product line pricing in making strategic marketing decisions. In this way, “ignorance can be bliss.” We also explore the link between demand characteristics and the three types of vertical strategic interaction. We show that the type of vertical strategic interaction present in a given environment is closely related with the convexity of the demand curve and the level of demand for a given Price. Interestingly, we find that linearity of demand is not a necessary condition for any of the three types of vertical strategic demand function. Consequently, in evaluating the robustness of analytic analyses, it may be more important to determine the type of vertical strategic interaction assumed instead of whether the demand is linear or nonlinear. Finally, our results are limited to situations where the channels are not coordinated and the retailer's precommitment to particular pricing policy and decision is credible. Although such situations still capture a significant portion of reality, we acknowledge that the insights from this study might not be applicable in all situations.
Gbenga Ibikunle - One of the best experts on this subject based on the ideXlab platform.
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trading places Price Leadership and the competition for order flow
Journal of Empirical Finance, 2018Co-Authors: Gbenga IbikunleAbstract:Abstract I investigate the role of Price Leadership and informed trading in the competition for order flow between high-tech entrant trading venues and established national trading venues. An analysis of BATS Chi-X Europe (Chi-X), a high-tech entrant, and London Stock Exchange (LSE), an established national exchange, suggests that Chi-X’s Price Leadership in the London market is critical to its acquisition of market share at LSE’s expense. Intraday variations in Price Leadership, driven by informed trading, liquidity constraints and institutional trading arrangements are, however inconsistent with the theoretical liquidity–efficiency link. Asymmetric effects of dark and algorithmic trading across the platforms are also reported.
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order flow liquidity and Price Leadership the curious case of high tech entrant markets
Social Science Research Network, 2014Co-Authors: Gbenga IbikunleAbstract:We study Price Leadership between an established national exchange (London Stock Exchange) and an entrant high tech market (BATS Chi-X) with inferior order flow. We show intraday variations in Price Leadership such that LSE narrowly leads Price discovery for most of the trading day, while BATS Chi-X overtakes it towards the close. This pattern is consistent with increased informed trading on BATS Chi-X and the effects of institutional trading arrangements on LSE, which confound the Price discovery-trading activity link. We also find that Prices are inextricably linked across both markets, hence trading fragmentation in Europe has not impaired Price discovery.
Emmanuel Dechenaux - One of the best experts on this subject based on the ideXlab platform.
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Price Leadership and firm size asymmetry an experimental analysis
Experimental Economics, 2009Co-Authors: Shakun D Mago, Emmanuel DechenauxAbstract:We use laboratory experiments to examine the effect of firm size asymmetry on the emergence of Price Leadership in a Price-setting duopoly with capacity constraints. Independent of the level of size asymmetry, the unique subgame perfect equilibrium of our timing game predicts that the large firm is the Price leader. Experimental data show that Price Leadership by the large firm is frequent, but simultaneous moves are also often observed. Profit outcomes in the previous period affect the subjects’ decisions to announce or wait in a way that hampers convergence to the equilibrium. Furthermore, while both small and large firms display a strong tendency to wait to announce their Price when firm size asymmetry is low, they often set Prices early when size asymmetry is high. Prices are higher when Price setting is sequential rather than simultaneous and when firm size asymmetry is high. Hence, Price Leadership by either type of firm has an anti-competitive effect that is more pronounced when the size difference between firms is large.
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Price Leadership and firm size asymmetry an experimental analysis
Social Science Research Network, 2007Co-Authors: Shakun D Mago, Emmanuel DechenauxAbstract:We use laboratory experiments to examine the effect of firm size asymmetry on the emergence of Price Leadership in a capacity constrained Price-setting duopoly. With discounting, the unique subgame perfect equilibrium of the timing game we analyze predicts that the large firm is an endogenous Price leader. In the experiment, independent of the level of size asymmetry, Price Leadership by the large firm is one of the most frequently observed timings of Price announcements. Overall, the large firm is more likely to set its Price early than the small firm. However, in nearly symmetric duopolies, both small and large firms display a strong tendency to wait to announce their Price. As a consequence, simultaneous Price setting is frequent. Finally, we find that Prices are higher when firms set Prices sequentially rather than simultaneously and when the level of size asymmetry between the firms is high.
Minakshi Trivedi - One of the best experts on this subject based on the ideXlab platform.
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optimizing store brand quality impact of choice of producer and channel Price Leadership
Production and Operations Management, 2020Co-Authors: Bo Liao, Candace Arai Yano, Minakshi TrivediAbstract:There is a vast literature on optimizing store brand quality, but it does not address the individual and joint effects of sourcing and pricing power; this is the focus of our paper. We study a retailer’s store‐brand quality‐positioning problem under three sourcing structures and two types of Price Leadership. The three sources are in‐house (IH), a leading national‐brand manufacturer (NBM) with a competing product, and a strategic third‐party manufacturer (3M). We consider two forms of Price Leadership, Manufacturer‐Stackelberg (MS) and Retailer‐Stackelberg (RS). We fully characterize the retailer’s optimal quality levels and their relative values across the six scenarios, as well as equilibrium Prices, retail profits, consumer welfare, and supply chain profits. Among other things, we find that the retailer chooses lower quality when sourcing from NBM than from other sources to benefit from quality differentiation as there are few other points of leverage. On the other hand, she chooses a higher quality when sourcing from 3M vs. producing IH because, despite the double marginalization, a higher‐quality store brand induces greater competition between 3M and NBM, which benefits the retailer. We also show that the power to decide the source is more important to the retailer than having pricing power.
Hwan Chung - One of the best experts on this subject based on the ideXlab platform.
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effect of store brand introduction on channel Price Leadership an empirical investigation
Journal of Retailing, 2017Co-Authors: Hwan Chung, Eunkyu LeeAbstract:Abstract In this study, we conduct an empirical investigation of the impact of store brand introductions on the Price Leadership relations in a distribution channel between a retailer and national brand manufacturers. We analyze a multi-product category retail database from a major grocery chain, which captures both a period before and a period after the introduction of a store brand in each product category. By applying the time series approach to this data set, we show that store brand introductions frequently lead to Price Leadership changes, generally in a more favorable direction for the retailer than for the national brand manufacturer, evidenced by either the decay of the manufacturers’ Price Leadership or the rise of the retailer’s Price Leadership. However, such a change is not universal but tends to be concentrated among a certain quality tier of national brands, which is not always the low-tier, but sometimes the top-tier despite the low-Price low-quality position of the store brand. The patterns detected in the data suggest that these changes are likely to reflect the retailer’s strategic effort to reshape the Price Leadership environment in a product category aided by the enhanced bargaining power and managerial sophistication that accompanied the store brand introductions.
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asymmetric relationships with symmetric suppliers strategic choice of supply chain Price Leadership in a competitive market
European Journal of Operational Research, 2017Co-Authors: Hwan Chung, Eunkyu LeeAbstract:Abstract This study investigates a supply chain member's strategic choice between Price Leadership and Price followership against each of its supply chain partners. In particular, our investigation focuses on whether a retailer ever has an incentive to have asymmetric Price Leadership types across multiple suppliers even in the absence of asymmetry across them in demand, cost, and competitive pricing behavior. By analyzing a game-theoretic model composed of two manufacturers and one common retailer, we show that the retailer does not always prefer Price Leadership over a manufacturer, and that the retailer's strategic choice over Price Leadership with one manufacturer depends upon its Price Leadership type with the competing manufacturer and the degree of product substitutability. Surprisingly, although the competing manufacturers are completely symmetric in demand and cost characteristics, if the retailer does not have Price Leadership over one manufacturer, it prefers being a Price leader over the other manufacturer when the product substitutability is sufficiently low, resulting in an asymmetric Price Leadership despite no asymmetry between the manufacturers. On the other hand, higher degrees of product substitutability lead the retailer to choose not to seek Price Leadership against either manufacturer. In contrast, each manufacturer always finds it profitable to be a Price leader over the retailer, regardless of product substitutability and the Price Leadership situation between the retailer and the competing manufacturer. These strategic choices over vertical Price Leadership reflect interesting interplays of product positioning, the supply chain members’ pricing objectives, and their foresights of other supply chain members’ pricing behavior.