PACIS 2021 Proceedings
Motivated by quantity loss, quality drop, and asymmetric information along supply chains for perishable-goods, we explore how supplier’s new technologies adoption benefits the supplier and the retailer with a dual-channel under different pricing schemes. With new technologies, quantity loss is reduced and quality is improved, which is called improvement level. Consumers are willing to pay higher prices because of symmetric information, which is the so-called premium effect. Based on the supplier’s pricing theme selection and adoption, we employ four types of subgames. We examine the impact of the premium effect on the supplier’s adoption and retailer’s choices. We find the supplier always benefits more from inconsistent pricing scheme, and which pricing scheme is more profitable for the retailer depends on the market segmentation, the cross-price elasticity coefficient of demand, and the tag cost. The premium effect can be strong enough to induce the supplier’s investment while the improvement level cannot.
Zhao, Shuai and Li, Wenli, "Is Perishable-goods New Technology Adoption always Profitable?" (2021). PACIS 2021 Proceedings. 126.
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