Pricing and Advertising Strategies of the E-retailer under a Limited IT Service Capacity

doi:10.3969/j.issn.1007-7375.e17-3206

Abstract

Abstract: A pricing and advertising problem of an e-retailer is studied considering a limited IT service capacity. First, the decision model of monopolized market is established. It is found that the retailer's advertisement, retail price and the consumer surplus are positively correlated with the IT service capacity. Second, the Nash and Stackelberg games are developed to analyze the retailers' decisions in the competitive market. The results show that the retail prices of both retailers in Stackelberg game are higher than those in Nash game, but the advertisements and consumer surplus are lower than those in Nash game. As to retailer 1, the optimal IT service capacity in Stackelberg game is larger than that in Nash game; the result of retailer 2 is the opposite. The influence of the consumer's advertising and time sensitivity on the retailer's optimal profit and IT service capacity is also analyzed.

Key words: limited IT service capacity, e-retailer, ad-investment, pricing

CLC Number:

F272.3

LI Zenglu, NIE Jiajia, FENG Lin. Pricing and Advertising Strategies of the E-retailer under a Limited IT Service Capacity[J]. Industrial Engineering Journal , 2018, 21(2): 27-37.

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