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- Title
INVENTORY MANAGEMENT IN DECENTRALIZED MARKETS.
- Authors
Li, Fei; Murry, Charles; Tian, Can; Zhou, Yiyi
- Abstract
We present a directed search model of intermediaries' dynamic inventory and revenue management. Search frictions hinder instantaneous replenishment, prompting intermediaries to utilize dynamic inventory‐based pricing and ordering strategies. In equilibrium, when inventory is high, an intermediary posts a lower retail price to speed up sales and depresses wholesale price to slow down purchases. We characterize the evolution dynamics of inventory holdings and their steady‐state distribution, and extend the model to multiunit wholesale orders, product differentiation, and heterogeneous intermediaries. Using data from used‐car dealers, we quantitatively evaluate the welfare consequence of used‐car dealers' inventory management practice.
- Subjects
INVENTORY control; MARKETING management; WHOLESALE prices; REVENUE management; TIME-based pricing
- Publication
International Economic Review, 2024, Vol 65, Issue 1, p431
- ISSN
0020-6598
- Publication type
Article
- DOI
10.1111/iere.12669