Multi-Oligopoly Sequential Pricing Mechanisms and Their Game Analysis in Raw Material Supply Chains

Abstract

The sequential pricing game model is an approach that can be effectively used to solve the problem with multi-oligopoly pricing mechanisms in raw material supply chains. However, the existing sequential pricing mechanism does not fully consider constraints such as the purchase volume of downstream firms and the change information of each parameter, which leads to the pricing mechanism being detached from the real market. According to the concept of the sequential pricing game model being used among multi-oligopolies under constraints, we constructed the constrained sequential pricing game model by incorporating the parameters related to the product demand function, marginal production cost, dominant coefficient, following coefficient, and agreed minimum purchase volume as constraints, and the model was converted into a nonlinear bilevel programming model to facilitate model solving. Furthermore, we provided the analytical solution formulas for six special cases, thus making the model more similar to the real market. In addition, the effects of the agreed minimum purchase volume and the dominant and following coefficients on the equilibrium quoted prices and profits of the firms were analyzed. The results of the numerical simulation show that the constrained sequential pricing game model is more effective than the unconstrained sequential pricing game model in solving the problem with the multi-oligopoly pricing mechanism, which means that it can be used to establish a better pricing mechanism and provide a more reasonable and scientific basis for market operation and policymakers in solving practical problems.