TY - JOUR
T1 - Impacts of trade credit on pricing decisions of complementary products
AU - Ren, Da
AU - Lan, Yanfei
AU - Shang, Changjing
AU - Wang, Jiahe
AU - Xue, Chenlin
N1 - Funding Information:
This work was supported partially by the Natural Science Foundation of China under Grant Nos. 71771166 and 71834004 , the Tianjin Natural Science Foundation under Grant No. 18JCQNJC04200 , and a Sêr Cymru II COFUND Fellowship, UK.
Publisher Copyright:
© 2020 Elsevier Ltd
PY - 2020/8/1
Y1 - 2020/8/1
N2 - To explore the impacts of trade credit on the pricing decisions of complementary product manufacturers, we establish a Bertrand model of two-echelon supply chains. Such a supply chain consists of two duopolistic suppliers that provide complementary products to a monopolistic retailer in three scenarios: 1) no supplier extends trade credit, 2) only one supplier extends trade credit, and 3) both suppliers extend trade credit. We find that the impacts of trade credit on the profit of each supply chain member are dependent on the difference in the opportunity cost between the upstream suppliers that extend trade credit and the downstream retailer. If the value is negative, one supplier will increase its profit by extending trade credit, thereby enhancing the profits of the other supplier and the retailer simultaneously. Further, if the value is negative, both suppliers adopting trade credit will provide more benefits to the whole supply than only single supplier adopting it. On the contrary, if the value is positive, no party extending trade credit will benefit all participants the most.
AB - To explore the impacts of trade credit on the pricing decisions of complementary product manufacturers, we establish a Bertrand model of two-echelon supply chains. Such a supply chain consists of two duopolistic suppliers that provide complementary products to a monopolistic retailer in three scenarios: 1) no supplier extends trade credit, 2) only one supplier extends trade credit, and 3) both suppliers extend trade credit. We find that the impacts of trade credit on the profit of each supply chain member are dependent on the difference in the opportunity cost between the upstream suppliers that extend trade credit and the downstream retailer. If the value is negative, one supplier will increase its profit by extending trade credit, thereby enhancing the profits of the other supplier and the retailer simultaneously. Further, if the value is negative, both suppliers adopting trade credit will provide more benefits to the whole supply than only single supplier adopting it. On the contrary, if the value is positive, no party extending trade credit will benefit all participants the most.
KW - Complementary product
KW - Pricing decision
KW - Production modeling
KW - Supply chain management
KW - Trade credit
UR - http://www.scopus.com/inward/record.url?scp=85086453639&partnerID=8YFLogxK
U2 - 10.1016/j.cie.2020.106580
DO - 10.1016/j.cie.2020.106580
M3 - Article
AN - SCOPUS:85086453639
SN - 0360-8352
VL - 146
JO - Computers and Industrial Engineering
JF - Computers and Industrial Engineering
M1 - 106580
ER -