| Article ID: | iaor20164053 |
| Volume: | 63 |
| Issue: | 6 |
| Start Page Number: | 449 |
| End Page Number: | 459 |
| Publication Date: | Sep 2016 |
| Journal: | Naval Research Logistics (NRL) |
| Authors: | Xie Jinxing, Zhao Xiaobo, Shen Zuo-Jun Max, Zhong Feimin |
| Keywords: | game theory, economics, programming: multiple criteria |
This article considers a multistage channel with deterministic price‐sensitive demand. Two systems for pricing decisions, that is, the bargaining system and the leader‐follower system, are compared. We characterize the necessary and sufficient conditions on the power structure, under which the solution of the bargaining system Pareto dominates that of the leader‐follower system. Also, under such conditions, we give a tight upper bound of channel efficiency of the bargaining system, which converges to 100% channel efficiency as the number of stages increases to infinity.