Optimal pricing strategy in a competitive retailing setting

Abstract

This thesis is interested in the conditions for retailers who request financial assistance from the bank. The bank evaluates the payoff ability of the retailers based on the marketing influence and the leadership status. To examine the impact of these two measurements on the bank`s decision, the problem is modeled using three different games: 1) Supplier Stackelberg; 2) Retailer Stackelberg; 3) Nash equilibrium. Based on the optimal solutions, I conduct sensitivity analyses and use empirical evidence to illustrate the impacts on prices, demands, and profits of the retailer and the supplier, as well as on the bank`s revenue and the retailer`s financing cost. Results show that as more effort the retailer puts on promoting its marketing influence, its profit first increases and then decreases. However, the financing cost keeps increasing. Besides, when the retailer is the supply chain leader, it gains a high profit and a low financing cost.