Research on models of pricing based on coordination and Bertrand game under electronic commerce

Models of pricing based on coordination and Bertrand competition between manufacturer and distributor under electronic commerce are discussed. A system consisting of manufacturer, distributor and customers is considered, in which manufacturer can sell products to distributor, who, in turn, sells the products to customers through traditional channel, or manufacturer can transact directly with customers in an electronic manner. If the supply chain is vertically integrated, model is established with the objection of maximizing the total expected profit. In the Bertrand game setting, manufacturer can establish model with the objection of maximizing his expected profit, and prices of products sold to distributor through traditional and online channels are regarded as decision variables; distributor can establish model in which decision variable is price of product sold to customers. At last, a sketchy way to determine the optimal price under the condition that both traditional and online channels exist is given.