Retail Costs,Ordering And Resale Prices Maintenance

The sale of some products requires retailers to pre-order the number of products to be purchased from manufacturers based on market conditions,which creates uncertainty and adversely affects upstream manufacturers.In order to coordinate information uncertainty in the retail market and stabilize the retailer's optimal order,manufacturers often adopt vertical restraint tools,and the most common and controversial restraint tool is resale price maintenance.Resale Price Maintenance(RPM)is a vertical restraint that refers to a manufacturer's ability to limit the final retail price of a product or service through a vertical agreement with a retailer.Most of the research on RPM is based on the dependence and conflict of interest relationship between manufacturers and retailers.It analyzes the role of RPM in solving horizontal and vertical externalities,and then resolves market uncertainty.However,the existing mechanism of RPM lacks a theoretical study that combines the motives of manufacturers to implement RPM with the retail costs and ordering issues of retailers.Generally speaking,manufacturers cannot directly interfere with the retail cost scale of retailers.However,the size of retail costs directly affects the retailer 's ordering decisions and has an impact on manufacturers 'profits.Therefore,manufacturers have incentives to control the retail costs of retailers.This article introduces investment factors that can change the retail cost of retailers in the ordering model,considers the impact of changes in the retail cost scale of retailers on ordering,and studies the reasons for manufacturers to implement RPM.And the mechanism of the impact of RPM on the scale of retail costs.This article considers the uncertainty of investment information.In two situations,the market investment information is complete and the investment information is incomplete,the impact of the completeness of the information on retail costs and the game relationship between upstream and downstream companies is analyzed.This article establishes a retail investment game model to explain the cause and effect of manufacturers implementing RPM.By introducing the realistic condition that investment I has exclusive or non-exclusive features,the impact of retailer's investment with different characteristics on the model conclusions is analyzed.Consider that the retailer's investment has two characteristics: one is the exclusive characteristic,which means that there are only one retailer in the market that can invest to obtain low retail costs;the other is the non-exclusive characteristic,which means that every retailer in the market can choose to invest Obtain low retail costs.In considering a retail investment game model in which investment has exclusive or non-exclusive characteristics,the effects of two investment characteristics on market equilibrium and social welfare are compared.Research shows that regardless of whether the investment information is complete or not,when market investment has non-exclusive or exclusive characteristics,and there is a certain economies of scale in the retail cost of retailers due to investment,manufacturers have incentives to implement RPM and transfer retail in non-exclusive characteristics markets Because of the risk of destructive competition that may arise from investment and the coordination of the retailer's strategic behavior,the retailer's strategic behavior is prevented in an exclusive market,thereby encouraging the retailer's investment behavior,reducing retail costs,and increasing market orders.the amount.And,since RPM can incentivize retailers to invest effectively,implementing RPM is beneficial for manufacturers and consumers.The research results in this article can well explain that there are a large number of investment behaviors and RPM implementation cases that can reduce the retail cost of retailers in the market,such as retail market warehousing technology investment,talent reserve investment,etc.Our research shows that when judging whether the implementation of RPM is reasonable,the relevant departments need to adopt a prudent attitude to incorporate the relationship between the retailer's investment,changes in retail costs,and the implementation of RPM into the decision-making reference factors.