Price Coordination Research Articles

Strategic Climate Cooperation and Greenhouse Gas Price Coordination

Strategic Climate Cooperation and Greenhouse Gas Price Coordination

The Effect of Declining Listings on Concentration and Market Structure in Residential Real Estate Brokerage

Real estate brokers compete in localized markets generally characterized by low barriers to entry and many participants; however, widespread and consistent price coordination has persisted over multiple decades. Previous research has found that while anecdotal instances of high concentration exist, the industry is relatively unconcentrated. In the past decade and a half, a major recession and a pandemic have significantly reduced housing supply in many markets. We analyzed the competitiveness of the market structure of residential real estate brokerage in 200 individual U.S. markets, varying by size and geographic location, to see whether real estate brokerage markets have become more concentrated. Contrary to expectations, we found that larger firms were more adversely affected by the nationwide reduction in listings and that competitiveness of market structure in this industry was not negatively impacted. Additionally, we were able to engage in a longitudinal comparison in 90 of these markets, 14 years apart, allowing us to observe the impact of a sizable contraction in the overall volume of listings that occurred in 2021.

Уніфікація показників для контролю за різними формами монопольної влади

The paper demonstrates the necessity and possibility to unify the controlling indicators for different types of monopoly (monopolistic competition, oligopoly, natural monopoly) in order to increase efficiency of the monopoly control. Especially this concerns the complex types of monopoly from the point of view of its control, for example, oligopoly. The complexity of this type of monopoly control is associated with the actual inevitability of the appearance of tacit pricing coordination among the oligopoly participants. And the problem is not so much in admitting that the very fact of such a coordination is difficult to prove as in defining the harm it causes to the market and the entire economy. This paper shows the possibility to use the quantitative indexes of monopoly control proposed based on author’s CMI-model of macroeconomic dynamics, to apply these indexes for various types of monopoly. A distinctive feature of this model is the possibility to calculate the vector of “natural” prices for any sector (i.e., the prices that correspond to the state of perfect competition even if it is impossible to reach this state in the existing markets). And the comparison of the actual market price with the “natural” one allows us to control a monopoly using the price indexes alone. In turn, it allows us to perform a monopoly control at various hierarchical levels of the economic system (a firm, an economic sector and economy as a whole). Such a control enables us to calculate the degrees of the monopoly impact both on the entire economy, and on its various sectors. Quantitative values of these degrees can be used as evidence in antitrust litigations and for choice of corresponding instruments to “punish” the monopoly for such abuses. The paper reveals the mechanism of use of the proposed formulas for determination of the monopolistic power and degree of its impact on economy and various economic sectors for the cases of oligopoly and natural monopoly. Also, this paper demonstrates the mechanism of the influence of antimonopoly policy on the configuration of business cycle and on economic growth rate (when other policies are neutral). This opens up the possibility to combine the antitrust policy with the anticyclical and fiscal ones, because, under recession, increased monopolistic power in an individual sector may help the whole economy get out of the crisis.

The cost coordination theory of harm and the EU trucks case

ABSTRACT This article reviews and critically assesses the “cost coordination” theory of harm developed in a recent eponymous article, Harrington (2022), and its application to the EU trucks case. We conclude that, while the cost coordination theory is a valuable and interesting contribution to the academic literature, it assumes a number of market features that may not be present in the EU trucks case—in particular that list price coordination is persistent rather than occasional, that transaction prices are sufficiently transparent to implement an effective monitoring and retaliation mechanism, and that list price changes are interpreted by local price setters as reflecting changes in cost rather than changes in other variables. We also note that, compared with standard price coordination, cost coordination generally tends to be both harder to sustain and less effective at raising prices if it is sustained.

Making airline coalition frequent-flyer programs profitable: An analytical investigation

This paper investigates the conditions for airline coalition frequent flyer program (FFP) to exist. A stylized economic model is proposed to analyze both stand-alone and coalition FFP. With the help of numerical analysis, we identify the profit-maximizing conditions for both types of FFP and recognize critical thresholds for a profitable coalition FFP. We find that a coalition FFP would not be profitable if the reward value were far less than the total price of airfare and partner product. In addition, the optimal reward of a coalition FFP will increase as the total price rise. Finally, coalition FFP is unlikely to be more socially efficient than stand-alone FFP. Based on the analytical results, we provide policy implications and highlight the importance of optimal rewards, partner price coordination and market supervision for the successful and profitable airline coalition FFP.

How do antitrust regimes impact on cartel formation and managers’ labor market? An experiment

We explore the impacts of different antitrust regimes on managers’ labor contracts, when shareholders are intent on their managers engaging in price fixing activities. We compare legal regimes that fine firms to regimes that prosecute managers. We build a theoretical model, which we take to the laboratory. We observe contract choices of shareholders for a given legal regime, as well as the probability of managers forming explicit cartels and coordinating on prices in a repeated Bertrand oligopoly, taking contract and legal regime as given. Our results suggest that there is less collusion when the legal regime prosecutes managers. High-powered contracts do not incentivize cartel formation or price coordination effectively, irrespective of legal regime. Nevertheless, high-powered contracts were most frequently chosen by shareholders, often with collusive intents.

RETRACTED ARTICLE: The impact of omni-channel collaborative marketing on customer loyalty to fresh retailers: the mediating effect of the omni-channel shopping experience

The relationship between collaborative marketing and customer loyalty has attracted attention in retail practice. However, in omni-channel retail, the impact mechanism of the two needs to be further defined academically. Based on the theoretical analysis of the stimulus-organism-response (SOR) framework, this paper systematically creates a research model of the impact of omni-channel collaborative marketing on new customer loyalty. It leads an empirical study using structural equation modeling with survey data from 550 agri-fresh produce omni-channel customers. The samples obtained this time is more appropriate to the overall characteristics of fresh omni-channel customers. The structural equation modeling (SEM) research model was developed on the impact of omnichannel collaborative marketing on new customer loyalty. The results show that both dimensions, i.e., price coordination and service and distribution coordination of omni-channel collaborative marketing strategy, positively affect omni-channel shopping experience and customer loyalty. Moreover, product and sales promotion coordination do not directly affect customer loyalty but through the mediating effects of the omni-channel shopping experience. Omni-channel shopping experience plays a mediating role in the relationship between omni-channel collaborative marketing and customer loyalty.

Privacy-preserving decentralized price coordination for EV charging stations

Price competition among electric vehicle (EV) charging stations is as fierce as the competition among gas stations. Nash equilibrium (NE) is a solution concept that can characterize a competition’s efficient and stable state. However, calculation of the equilibrium is often time-consuming and requires complete information on the charging stations. Rapidly changing charging stations often hinder reaching equilibrium. In this study, we analyze price competition with service capacity constraints and use an ordinal potential game framework to investigate the structure of the competition. By constructing the ordinal potential function, the equilibrium characterization is converted to identifying the solution through a single-objective optimization. We further propose a decentralized algorithm to enable effective price coordination to achieve equilibrium with maximized social welfare. To preserve the privacy of charging stations from internal collusion and external attacks, an advanced secure multi-party computation technology known as the Paillier Cryptosystem is customized for our proposed decentralized algorithm. Numerical studies based on field data suggest the significance of our framework.

Exploring Data Integrity of Dual-Channel Supply Chain Using Blockchain Technology.

The study intends to solve the problems of complex product circulation caused by information asymmetry and the untimely communication of production and sales information in the process of product sales to reduce the cost in the process of product circulation. Based on blockchain technology, the data integrity of the dual-channel supply chain is studied. First, the data of the supply chain conduct coordinated management to achieve the integrity of the supply chain data. Then, under the background that both retailers and suppliers are risk-neutral individuals, the benchmark model of the dual-channel supply chain is constructed, and the online and offline sales prices of products under different decision-making modes are analyzed. Finally, taking fresh agricultural products as an example, the sales strategies of the online and offline sales channels of fresh agricultural products are studied, and a dual-channel supply chain model is constructed. The profit of each member in the supply chain system under this model is obtained by the inverse method. The simulation results demonstrate that the retailer's revenue and the total revenue of the system increase obviously with the growth of the price discount coefficient after the price discount strategy is applied. When the compensation cost is between 1,000 and 3,000, the profit of retailers in the supply chain system is improved by using the price coordination mechanism, while the profit of suppliers decreases to some extent. When the value of compensation cost is 7,000–9,000, the application of the price coordination mechanism increases the profit of suppliers in the supply chain system, while the profit of retailers declines to a certain extent. The research content reported here effectively alleviates the profit conflict and the double marginal effect between the two channels and enriches the theoretical system knowledge of the coordination of the two channels' supply chain of agricultural products.

Order beyond Equilibrium: Ludwig Lachmann's Bridging of Seemingly Irreconcilable Traditions

Abstract Throughout his career, Ludwig M. Lachmann theorized about how economies and societies achieve order in an uncertain world full of heterogeneous agents, heterogeneous production factors, and multilayered subjectivity. This article traces how he began his research agenda by expanding the conventional equilibrium framework of the 1930s to include (potentially diverging) expectations but gradually abandoned price coordination as the sole source of order in an economy. Instead, he set out to formulate an institutional theory of socially embedded plan coordination, which transcended the traditional division between commerce and community. This article illustrates this shift in Lachmann's focus by using two of his neglected German publications. Additionally, it lays out how Lachmann's effort in the “thinking in orders” tradition was principally rooted in his dissatisfaction with approaches to economics that reduced it to a “pure logic of choice.” Lachmann instead conceived of his discipline as being something closer to Max Weber's “socioeconomics,” and in this he was strongly influenced by the German historical school. This article explains how, ironically, this tradition, which historically positioned itself in stark opposition to the Austrian school, has—through the mediation of Lachmann—had considerable influence on the recent history of the Austrian school in the United States.

Dynamic Strategy Analysis of Emission-Reduction Technology Investment Based on Pricing Coordination Mechanism under Cost Subsidy Policy

Climate change has become a pressing concern in recent decades, and the reduction of greenhouse gas emissions is now recognised as an important strategy for redressing that concern. The carbon trading system and the provision of low-carbon cost subsidies are essential measures for reducing emissions in various countries and regions. In this context, we study the investment decision of emission reduction technology in a supply chain composed of a leading manufacturer and a following retailer under the cost subsidy policy of carbon emission reduction. We consider consumers’ low-carbon preferences and utilise differential game theory and dynamic optimisation technology to construct the investment game model under a cost subsidy policy affecting manufacturers and retailers. We then identify the equilibrium strategy and the evolution path of emission reduction, profit, and social welfare according to the interest’s composition and game relationship of each stakeholder. We also use numerical simulation method to analyse the evolution path of the system and the sensitivity of related parameters, so as to determine the influence of related parameters on the structure and path of the system. We conclude that under the current carbon trading system, the cost subsidy policy implemented by the government plays a positive role in promoting emission reduction investment and corporate profits of supply-chain-related enterprises.

Coordination of pricing and inventory replenishment decisions in a supply chain with multiple geographically dispersed retailers

We study the efficiency of a multi-stage supply chain controlled by a single decision-maker with the goal of maximizing the total profit per time unit for a single product by coordinating the purchasing of raw materials from an external supplier, manufacturing and shipping the product between consecutive stages, and determining the selling price and final demand for the product sold by multiple retailers. Retailers are geographically dispersed, control their own market areas, and differ in terms of operating costs and marketing strategies. Each retailer has a different price-sensitive demand function. In this study, we propose a mixed integer nonlinear programming model that maximizes the total profit per time unit, which includes the revenue of the final product, echelon holding costs, and fixed costs for ordering and shipping items at each stage and at each retailer location. Using a numerical example, we show that the model with varying selling prices at the retailers yields higher profits than the model with the same selling price across all the retailers. We also perform an analysis comparing the coordinated approach versus the sequential approach for pricing and inventory replenishment decisions by varying the market size and demand function parameters. The results show that, as the market size parameter decreases, the coordinated approach yields a higher profit than the sequential approach does. Additionally, given a constant market size setting, the results show that pricing and inventory replenishment decisions are very sensitive to the demand function parameters. The analysis also shows that the coordinated approach yields an average profit gain of 24.18% compared to the profit of 3.53% yielded by the sequential approach. Similarly, it is shown that the coordinated approach always yields a better profit than the sequential approach across all scenarios generated by varying the demand parameters. Moreover, we propose a Simulated Annealing (SA) algorithm to obtain near-optimal solutions in a timely manner. A computational comparison shows that the average solution reached by the proposed SA algorithm is at 0.04% from the optimal solution.

Price negotiation and coordination in outsourcing supply chain under yield and demand uncertainties

This paper considers the issues of pricing, lot-sizing decisions and coordination in a supply chain consisting of one original equipment manufacturer (OEM) and one contract manufacturer (CM). A Bayesian game accounting for asymmetric information is established to optimize the CM’s outsourcing price and the OEM’s selling price. A Stackelberg game incorporating yield and demand uncertainties is subsequently modelled to optimize the CM’s production quantity and the OEM’s order quantity. Finally, a shortage penalty with surplus purchase contract is proposed to coordinate the supply chain. It is found that the optimal outsourcing price is either the lower limit or the stationary point of the common price domain, while the optimal selling price is the upper limit. Whether the CM adopts a conservative or an aggressive production strategy depends on the threshold of the outsourcing price. Moreover, the coordination contract offers great flexibility in parameter selection. By setting the order quantity, penalty price and surplus purchase price properly, the supply chain can realize a win-win situation.

Coordinated pricing of coupled urban Power-Traffic Networks: The value of information sharing

The growing demand for the fast charging of electric vehicles has created stronger interdependency between the operation of urban traffic networks and power distribution networks. This paper investigates the necessity and feasible mechanism of coordinated pricing in coupled urban power-traffic networks. The retail charging pricing of the power distribution network operator and congestion pricing of the urban traffic network operator will simultaneously affect the routing and charging decision choices for electric vehicles. Then, the response of multiclass vehicles—i.e., the aggregated traffic flow and charging load—will in return affect the operation performance—i.e., power loss and traffic congestion—of the coupled networks. However, due to operators’ differing pricing goals and limited access to user information, the actual response for vehicles might deviate from the respective expectation of the two operators under isolated pricing. With the growing penetration of electric vehicles, such deviation might become more evident, calling for a focus on pricing coordination. To investigate the necessity of coordinated pricing, the Stackelberg game framework is employed to model the pricing interactions between operators (leaders) and vehicles (followers). Accounting for privacy issues, a decentralized coordination framework of the two networks is proposed for information sharing. The numerical test results confirm the negative impacts of isolated pricing and demonstrate the effectiveness of coordinated pricing. Sensitivity analysis is conducted to examine the influence of critical parameters: e.g., charging electric vehicle penetration and total travel demand.

Joint pricing and replenishment policies for risk‐averse retailers under duopolistic competition

AbstractThis study investigates the coordination of pricing and inventory replenishment under retail competition. Although conventional wisdom suggests that a retailer follow conservative operating strategies when the competing retailer adopts a markdown strategy, the retailer may actually raise its price (order) if its operational costs are sufficiently high (low) and its competitor's price is relatively low. If the retailer is more risk averse, its pricing and replenishment decisions hinge highly on its risk aversion level and its competitor's current price. The increase of the wholesale price always hurts the retailers and may even hurt the manufacturer if it is exorbitant.

Possibilistic cooperative advertising and pricing games for a two-echelon supply chain

This paper addresses coordination of pricing and cooperative advertising policies in a two-echelon supply chain under fuzziness of demand function’s parameters and manufacturing costs. Three different decentralized scenarios are introduced with regard to the players’ market power: (1) manufacturer-Stackelberg game where the manufacturer has the dominant power in the channel, (2) retailer-Stackelberg game where the manufacturer follows the strategies taken by a dominant retailer, and (3) Nash game where the manufacture and the retailer with the same market power make the decisions simultaneously. The equilibrium wholesale and retail prices, national and local advertising expenditures, and participation rate are determined using the concepts of possibilistic game theory, and the results are compared with the centralized channel scenario. A numerical example is presented to illustrate the effectiveness of the proposed modeling approach, and sensitivity analyses are carried out to measure the impact of the demand function’s parameters as well as the levels of uncertainty.

The Coordinator Role of Trade Credit Contract for Coordinating Integrated Pricing and Periodic Review Inventory Decisions With Stochastic Demand

The purpose of this study is to analytically coordinate joint pricing and periodic review ordering choices for a supply chain (SC) facing stochastic price-dependent demand. In this paper, first, the optimal inventory and pricing strategies made by SC members are obtained under decentralized and centralized models. Thereafter, employing a trade credit contract, it proposes to provide a win–win coordination for the investigated SC. Sensitivity analyses are provided both analytically and numerically which indicate the significance of trade credit contracts in improving both customer service level and customer satisfaction. The results indicate that using trade credit contracts, the coordination of joint pricing and periodic review ordering choices is achievable. Moreover, the proposed trade credit contract has a unique feature in achieving more economic benefit compared to the centralized model under some circumstances. In addition, sensitivity analyses reveal that the coordination of integrated periodic review ordering and pricing choices is beneficial, especially for items with high price sensitivity and high demand uncertainty. Our findings also show the applicability of the trade credit contract for an SC facing highly uncertain demand.

Production mode and pricing coordination strategy of sustainable products considering consumers’ preference

In order to study the pricing and coordination of sustainable supply chain (SSC), this paper investigates the equilibrium results of different production modes under non-cooperative game and cooperative game aiming at the market segmentation demand of sustainable products (SP), environment-friendly products (EFP) and general products (GP) which coexist and can be replaced under different preference levels. Theoretical analysis shows that when consumers have different preference coefficients for products, the critical zone of the manufacturer to choose production modes can be determined, and the system performance under cooperative game is significantly better than that under non-cooperative game. Through the cooperative pricing strategy of Rubinstein bargaining coordination, pareto optimization of profits of supply chain system and its members can be realized under different production modes. The system profits are 33.3% higher than that of non-cooperative game. The analysis of examples further verifies the influence of different production modes and the effectiveness of the coordinated pricing strategy.

Coordination Strategy for a New Retail Supply Chain Based on Combination Contract

The supply chain in the new retail context demands higher requirements on the price, service, and logistics level. It is very important to seek the coordination among the optimal price, service level, and logistics level. In this paper, we propose the coordination of pricing, the service level, and delivery time of a new retail supply chain composed of one product supplier, one platform service provider, and one logistics provider. Firstly, the profit function mode of product pricing, platform service level, and logistics distribution level that influence the consumers’ demand is constructed in two modes, namely, the centralized and decentralized decision mode. Then, we calculate and compare the optimal product price, the optimal platform service level, the optimal delivery time, and the profit of each member of the supply chain from both decision modes. We discovered that cooperation improves the service level, logistics level, and the income of each member of the new retail supply chain. Therefore, we propose a novel mode called the coordination mode as a strategy for the supply chain based on the combination contract. We performed a numerical analysis to demonstrate the feasibility and effectiveness of the coordination contract.

“Order-online-and-pickup-offline” strategy for online direct sale of time-sensitive commodities

Although recent decades have witnessed rapid development of e-commerce, direct sale of time-sensitive commodities on e-commerce platforms still faces significant challenges due to the dilemma between short delivery time and high delivery costs. To alleviate these challenges, manufacturers with online retailing operations have attempted to cooperate with offline retailers by using an “order-online, pickup-offline” (OOPO) strategy. To study the problem of effectively implementing the OOPO strategy for time-sensitive commodities, we consider a mechanism under which the manufacturer pays the retailers a cooperative service fee to ensure delivery coordination between the online and offline channels. We develop Stackelberg game-theoretic models to compare the profits of both delivery channels before and after the implementation of the OOPO strategy. By analyzing the models, we derive a feasible range on the cooperative service fee such that both channels are more profitable with the implementation. We further examine the plausibility of implementing the strategy when both channels are required to charge the same price on the commodities, which can lead to both channel coordination and pricing coordination.