Group buying on the web: a comparison of price-discovery mechanisms

Group buying on the web: a comparison of price-discovery mechanisms

0.00 Avg rating0 Votes
Article ID: iaor20073717
Country: United States
Volume: 49
Issue: 11
Start Page Number: 1546
End Page Number: 1562
Publication Date: Nov 2003
Journal: Management Science
Authors: ,
Keywords: purchasing, discounts
Abstract:

Web-based group-buying mechanisms are being widely used for both business-to-business and business-to-consumer transactions. We survey currently operational online group-buying markets, and then study this phenomenon using analytical models. We build on the literatures in information economics and operations management in our analytical model of a monopolist offering Web-based group-buying under different kinds of demand uncertainty. We derive the monopolist's optimal group-buying schedule under varying conditions of heterogeneity in the demand regimes, and compare its profits with those that obtain under the more conventional posted-price mechanism. We further study the impact of production postponement by endogenizing the timing of the pricing and production decisions in a two-stage game between the monopolist and buyers. Our results have implications for firms' choice of price-discovery mechanisms in e-markets, and for the scheduling of production and pricing decisions in the presence (and absence) of scale economies of production.

Reviews

Required fields are marked *. Your email address will not be published.