The Value of Priority Pricing of Downstream Firms in the Supply Chain with R&D Collaboration

Abstract

Abstract: As R&D becomes more and more difficult and supply chain awareness is deep into companies' heart, supply chain R&D collaboration is becoming common. The downstream partner can price prior to competitors but the value of priority pricing has not received the attention from the academic. This paper focuses on a competitive supply chain with an upstream firm and two downstream firms, and analyzes the priority pricing's value and influencing factors under R&D collaboration. The study finds that priority pricing reduces upstream manufacturer's and the downstream partner's revenue in the decentralized decision; priority pricing increases alliance benefits but decreases overall supply chain's revenue in the centralized decision. And the priority pricing's influence under R&D cooperation will increase with the increase of the market size, the decrease of production costs and the increase of the competition.

Key words: supply chain, R&D collaboration, sequential pricing, Shapely value

Wang Hui, Wang Qian. The Value of Priority Pricing of Downstream Firms in the Supply Chain with R&D Collaboration[J]. Management Review, 2021, 33(8): 314-325.

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