Article ID: | iaor20135293 |
Volume: | 59 |
Issue: | 9 |
Start Page Number: | 2093 |
End Page Number: | 2110 |
Publication Date: | Sep 2013 |
Journal: | Management Science |
Authors: | Duenyas Izak, Hu Bin, Beil Damian R |
Keywords: | pricing, auctions |
This paper studies an upstream supplier who quotes prices for a key component to multiple sellers that compete for an end‐buyer's indivisible contract. At most one of the supplier's quotes may result in downstream contracting and hence produce revenue for her. We characterize the supplier's optimal price‐quoting strategies and show that she will use one of two possible types of strategies, with her choice depending on the sellers' profit potentials relative to their uncertainties: