Group buying vs individual buying; a competitive approach for two retailers

Document Type : Article

Authors

Department of Industrial Engineering, K. N. Toosi University of Technology, Tehran, Iran

Abstract

Development of technology and expansion of social media emerge group-buying mechanism as a popular strategy. In this paper, two competitive retailers are considered that sell the same product to customer in a market, Group buying and individual buying. Three Different competition scenarios are considered, in order to implement the first two strategies, the Stackelberg model is used where the group-buying retailer and the Individual retailer are assumed to be the leader and follower, respectively. For the third strategy, the Nash equilibrium is applied when they decide separately. We analysis the optimal and equilibrium strategy in each scenario. And also determine the conditions for each retailer to be present in the market in each scenarios. Finally, a numerical example is provided, in order to illustrate the effectiveness of the aforementioned three scenarios in models.

Keywords

References

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Scientia Iranica

Articles in Press, Accepted Manuscript
Available Online from 20 June 2022

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