Pricing Strategies for Competitive Manufacturers under Increased Materials Prices

• Main Authors: Li-yi Yang, 楊力怡
• Other Authors: Fu-Shiang Tseng
• Format: Others
• Language: en_US
• Online Access: http://ndltd.ncl.edu.tw/handle/m8t66p

碩士 === 國立中央大學 === 工業管理研究所 === 96 === A pricing decision in duopoly is considered in this paper. There are two major manufacturers using the same raw materials and their products are partially substitutable to each other. As raw materials prices increase, they have to decide how to change their selling prices accordingly with the consideration of their products substitutability, the increasing raw material’s prices and rival’s pricing strategies in order to maximize their profits. We calculate an optimal mark-up that will not only maximize the manufacturers’ profits but also make the selling prices reach to Nash equilibrium in a most efficient way. The optimal mark-up prices are determined for manufacturers respectively, however if they have different intentions, their mark-up pricing strategies might be varied. If one of the manufacturers decides not to change his selling prices which are based on optimal mark-up, the other can adopt the critical mark-up strategy to stimulate the rival changing his purpose and selling prices. In this paper, we discuss how the parameters such as highest feasible prices, initial sale quantities, costs and substitutability affect our model; we also provide examples to illustrate some propositions or observations at the end.