| Abstract: |
Transaction prices are negotiated in many markets. A midstream party can decide whether to bargain first with the upstream or the downstream partner in the supply chain. In addition, with the development of third-party informediaries, price-comparison platforms and new technologies (e.g., blockchain), the initially negotiated prices are becoming increasingly transparent to subsequent negotiators. In this research we examine the economic impacts of transparency and bargaining timing on equilibrium wholesale and resale prices, as well as on the generation and allocation of surplus among supply chain participants. We highlight the role of transparency in influencing the interaction between price negotiations across the supply chain. We show that transparency can serve as a price-commitment device and benefit either the seller or the buyer, depending on who is the first one to bargain with the middleman. Nevertheless, when the total surplus of the supply chain is uncertain and conditional on the resale price, new equilibrium patterns may arise under which transparency benefits the late mover or improves the payoffs of all participants. We also
investigate how the strategic implications of transparency may be modified when the timing of negotiations is determined by the middleman, and how the equilibrium expected payoffs may vary across the bargaining sequences.
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Biography:
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Liang Guo is a Chair Professor of Marketing at City University of Hong Kong. He received a Ph.D. in Business Administration from University of California at Berkeley, and a B.A. in Economics from Beijing University. His research interests include economics of psychology, marketing strategy, industrial organization, and applied economics. He has published over thirty papers at top academic journals such as Journal of Marketing Research, Management Science, Marketing Science, AEJ: Microeconomics, and Journal of Economic Theory. He serves as an AE for Management Science and a SE for Production and Operations Management.
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