Pricing Decisions and Coordination in a TWo-echelon Supply Chain with TWo Competing Retailers

This paper studies pricing decision and coordination in a two-echelon supply chain which consists of one manufacturer and two nonidentical retailers who use retail price to compete for the end customers with complete information. The manufacturer takes Stackelberg leadership in dictating the wholesale pricing terms by implementing a two-part tariff. The sub game perfect Nash equilibrium has been get by use backward induction method. The retailer with larger market base or lower retail price has comparative advantage in the market. And the effect of the two-part tariff is equal to the quantity discount, which means the wholesale price is concerned with the order quantity (market demand). The structure of wholesale pricing mechanisms that are linear in the order quantity can coordinate the system under limiting condition.