Dynamic Competitive Newsvendors with Service-Sensitive Demands
When two firms compete for service-sensitive demands based on their product availability, their actions will affect the future market share reallocation. This problem was first studied by Hall and Porteus (2000) using a dynamic game model. We extend their work by incorporating a general demand model...
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Published in | Manufacturing & service operations management Vol. 9; no. 1; pp. 84 - 93 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Linthicum
INFORMS
01.01.2007
Institute for Operations Research and the Management Sciences |
Series | Manufacturing & Service Operations Management |
Subjects | |
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Abstract | When two firms compete for service-sensitive demands based on their product availability, their actions will affect the future market share reallocation. This problem was first studied by Hall and Porteus (2000) using a dynamic game model. We extend their work by incorporating a general demand model, which enables us to obtain properties that reveal the dynamics of the game and the behavior of the players. In particular, we provide conditions under which the market share of a firm has a positive value and give it an upper bound. We further extend the game competition model to an infinite-horizon setting. We prove that there exists a stationary equilibrium policy and that the dynamic equilibrium policy always converges to a stationary equilibrium policy. We demonstrate that demand patterns will dictate how firms compete rationally and show the likely outcomes of the competition. |
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AbstractList | When two firms compete for service-sensitive demands based on their product availability, their actions will affect the future market share reallocation. This problem was first studied by Hall and Porteus (2000) using a dynamic game model. We extend their work by incorporating a general demand model, which enables us to obtain properties that reveal the dynamics of the game and the behavior of the players. In particular, we provide conditions under which the market share of a firm has a positive value and give it an upper bound. We further extend the game competition model to an infinite-horizon setting. We prove that there exists a stationary equilibrium policy and that the dynamic equilibrium policy always converges to a stationary equilibrium policy. We demonstrate that demand patterns will dictate how firms compete rationally and show the likely outcomes of the competition. When two firms compete for service-sensitive demands based on their product availability, their actions will affect the future market share reallocation. This problem was first studied by Hall and Porteus (2000) using a dynamic game model. We extend their work by incorporating a general demand model, which enables us to obtain properties that reveal the dynamics of the game and the behavior of the players. In particular, we provide conditions under which the market share of a firm has a positive value and give it an upper bound. We further extend the game competition model to an infinite-horizon setting. We prove that there exists a stationary equilibrium policy and that the dynamic equilibrium policy always converges to a stationary equilibrium policy. We demonstrate that demand patterns will dictate how firms compete rationally and show the likely outcomes of the competition. [PUBLICATION ABSTRACT] |
Author | Wu, Shaohua Shang, Weixin Liu, Liming |
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Cites_doi | 10.1287/opre.45.1.54 10.1287/mnsc.16.8.B509 10.1287/mnsc.40.5.633 10.1017/CBO9780511625756 10.1080/07408170600854750 10.1287/mnsc.12.12.B538 10.1287/mnsc.38.2.182 10.1287/msom.2.2.144.12353 10.1287/opre.45.3.407 10.1002/nav.3800230102 10.1080/07408179108963839 10.1287/mnsc.23.1.38 10.1111/j.1540-5915.1990.tb01245.x 10.1111/j.1937-5956.1992.tb00358.x 10.1287/opre.1040.0149 10.1002/1520-6750(198806)35:3<397::AID-NAV3220350308>3.0.CO;2-Z 10.1016/0377-2217(94)90008-6 |
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References | B20 B10 B21 B11 B22 B12 B13 B14 B15 B16 B17 B18 B19 B1 B2 B3 B4 B5 B6 B7 B8 B9 Parlar M. (B16) 1985; 23 Parlar M. (B18) 1984; 21 McGillivray A. R. (B14) 1978; 16 Basar T. (B1) 1995 |
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SubjectTerms | availability competition Competition Customer services Demand demand model dynamic game Equilibrium feedback Nash equilibrium Market shares Mathematical models order quantity structure service-sensitive demand stationary policy Studies Vendors |
Title | Dynamic Competitive Newsvendors with Service-Sensitive Demands |
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