Journal of Korean Institute of Industrial Engineers (대한산업공학회지)

Korean Institute of Industrial Engineers (대한산업공학회)
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Analysis of Price Competition between B&M and C&M Suppliers

B&M유통업체와 C&M 유통업체간의 가격경쟁 분석

  • Cho, Hyung-Rae (Department of Industrial Systems Engineering, Gyeongsang National University) ;
  • Yu, Jung-Sub (Department of Industrial Systems Engineering, Gyeongsang National University) ;
  • Cha, Chun-Nam (Department of Industrial Systems Engineering, Gyeongsang National University)
  • 조형래 (경상대학교 산업시스템공학부) ;
  • 류정섭 (경상대학교 산업시스템공학부) ;
  • 차춘남 (경상대학교 산업시스템공학부)
  • Published : 2002.12.31
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Abstract

In this paper, we study the competition between two kinds of suppliers, a bricks and mortars(B&M) and a clicks and mortars(C&M). Using the circular spatial market model, we derive and analyze the Nash and Stackelberg equilibria as a function of offline market share and efficiency of online channel of the C&M supplier. The result can be summarized as follows: (1) Stackelberg equilibrium is always superior to the Nash equilibrium, (2) Under certain conditions, the price of online channel can be higher than that of offline channel, (3) It is impossible for the C&M supplier to encroach on all of the B&M supplier's market, (4) In some cases, the C&M supplier has incentive to lower the efficiency of its online channel for more profit.

Keywords

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