The Switching Decision between Pricing Strategies Based on Operation Efficiency

 This research studies a supply chain with two competitive suppliers and many buyers. The suppliers compete in the market based on their operation efficiencies as well as their pricing strategies. We investigate the switching decisions between the short-term pricing strategy that expands market and the long-term strategy that maximizes profit. The suitable pricing strategies based on their operational efficiencies are suggested to the suppliers to act and react in the competitive market under different situations through Game Theory. Managerial insights and practical guidelines are provided to the suppliers to set their competing prices and find their market niches in a competitive market. The equilibrium price, the market segmentation, and the overall profit of each supplier that results from different pricing strategy combinations are obtained, compared and analyzed.