Pricing policies for complementary products in a dual-channel supply chain

Abstract

• Four pricing models of complementary products in a dual-channel supply chain are established. • Different market power structures among two manufacturers and the retailer are considered. • Through theoretical and numerical analysis, some managerial insights are obtained. This paper investigates the pricing problem of complementary products in a supply chain with two manufacturers and one retailer, one of the two manufacturers uses dual channels including an online channel and a traditional retail channel to sell its product. We formulate four pricing game models through considering different market power structures of channel members, and derive the corresponding optimal pricing strategies. Based on the theoretical and numerical analysis, we study the effects of consumer channel loyalty, the level of complementarity, and the market power structures on the pricing strategies and the maximal profits of two complementary products. Some interesting and valuable managerial insights are obtained.