Analysis of Competitive Pricing on Retailing Channels

Abstract

The present work is concerned with the problem of competitive pricing strategy when the direct marketer opens either online or bricks-and-mortar stores to compete with the traditional retailer. In this study, we consider the competitive pricing between the direct marketer and the traditional retailer under the Bertrand and the Stackelberg market structure. Four pricing strategies, namely, SB, SO, BB and BO are investigated and compared to derive the optimal strategy.