Pricing in Channel Book Supply Chain Considering Possibility of Selling E-Book under Fixed and Decreasing Demands

The purpose of this research is to determine the optimal wholesale and final prices of printed and electronic books in a dual channel supply chain. Here, a comprehensive sensitivity analysis has been conducted on different supply chain parameters such as demand elasticity coefficients, customer tendency to printed books and book production costs. The effect of these variables on optimal prices, demands and final profit is analyzed. Results of centralized and fixed demand mode reveal that if the coefficient of customers' tendency to printed book is bigger than 0.5, then the final printed books' price will be higher than e-book prices. Pricing in decentralized model is done using the Stackelberg equilibrium. Results show that wholesale prices of p-book in decentralized and fixed demand system are equal to selling prices in centralized system, but the final selling price of p-book in decentralized system is higher than centralized one. In both systems, the e-book selling price is the same. In the fixed demand condition, either e-books are not published or they are simultaneously published with their printed versions; however, in the decreasing demand mode, e-books may be introduced to market at any time during books' life period. Introduction: In this paper, a three-level supply chain including publisher, bookstores, and final customers is considered. The publisher provides books to the market via printed and electronic versions. The production costs for one copy of e-book and p-book are denoted by and , respectively. The publisher provides p-books to bookstores at wholesale price, and customers can buy them at final selling price. E-books are provided to customers at price . The problem is defined in two time periods where in the first period, the publisher only delivers p-books at wholesale price and bookstores sell them at price . In the second period of books’ lifetime, the wholesale price is set to and e-books are simultaneously provided by the publisher to the market. The bookstores decide about the final selling price of p-books in the second period, . The following figure outlines the considering supply chain and its different distribution channels: Publisher Bookstore P-book E-book Fig. 1- Outline of the considering dual-channel supply chain The demand function is defined in two modes of fixed and decreasing. Assuming that prices remain unchanged during lifetime of books, demands are unchanged in the fixed mode while the demands for p-books an