In this thesis, we study firms' pricing strategies under three different market environments. Firstly, we study a supplier's contracting problem under non-discriminating practice. We consider a monopolistic supplier selling to two heterogeneous retailers with the same return contract or linear rebate contract. We characterize the retailers' equilibrium stocking quantities and the supplier's optimal strategy. In particular, we show that it is more likely for the supplier to sell through only one retailer under a return than under a rebate contract. We also study how the supplier's choice between a return and a rebate contract depends on the retail price difference, the procurement cost and the level of consumer search....[ Read more ]

In this thesis, we study firms' pricing strategies under three different market environments. Firstly, we study a supplier's contracting problem under non-discriminating practice. We consider a monopolistic supplier selling to two heterogeneous retailers with the same return contract or linear rebate contract. We characterize the retailers' equilibrium stocking quantities and the supplier's optimal strategy. In particular, we show that it is more likely for the supplier to sell through only one retailer under a return than under a rebate contract. We also study how the supplier's choice between a return and a rebate contract depends on the retail price difference, the procurement cost and the level of consumer search.

Secondly, we study the pricing and channel management problem in a market with two competing suppliers and an independent retailer. Each supplier can sell through his company-owned store where customers' perceived valuations on products are enhanced, the independent retailer or both. Suppliers deliver heterogeneous substitutable products, of which one is innovative and the other is incumbent. We characterize supplier's optimal channel strategies and pricing decisions under various market situations, and show that suppliers tend to use dual channels to sell innovative products under certain situations, while a single channel to sell incumbent products. We also find using company-owned stores may lead to a "win-win" situation for both suppliers.

Finally, we study firms' pricing strategy of extended warranty service. We consider a multi-period model of a product sold with fixed-length complimentary warranty and optional extended warranty, which incorporates extended warranty price as an indicator of product reliability. We characterize two long-run equilibrium pricing policies for the product and extended warranty service, depending on the actual product reliability. We also show that the relations between extended warranty terms and product reliability are consistent with the empirical results of Boulding and Kirmani (1993) and Agrawal et al. (1996).