The Study of Differentiated Products Pricing Strategy Based on Game Model

Abstract

The pricing strategy of differentiated products in two stages supply chain is studied in this paper. Using game theory, we build Nash game model, Stackelberg game model, and union pricing model. The optimal solution of differentiated products pricing strategy for manufacturer and retailer in each model is found. Based on this, the variety of supply chain total profits in each model is analyzed, and a valid pricing strategy set in union model is found. Finally, by computer simulation, we analyze the change of manufacturer's profits and retailer's profits in this three models, and reach a conclusion that total profits in union model are the best, Nash game model the next, and Stackelberg game model the worst. This conclusion is in accord with universal rule of economics