Pricing and Allocation of Retail Space with One RFID Enabled Supplier and One Non-RFID Enabled Supplier

International Journal of Revenue Management, Vol. 3, No.1 pp. 37-55, 2009

Simon School Working Paper No. FR08-20

24 Pages Posted: 18 Aug 2008 Last revised: 2 Jul 2014

See all articles by Joseph G. Szmerekovsky

Joseph G. Szmerekovsky

North Dakota State University - Department of Management, Marketing & Finance

Vera Tilson

University of Rochester - Simon Business School

Jiang Zhang

Adelphi University - School of Business

Date Written: February 20, 2008

Abstract

We consider a retailer who has two suppliers: one who is RFID enabled and another who is not. Assuming vendor managed inventory (VMI), we address the problem of allocation and pricing of the retail shelf-space. Modeling the problem as a Stackelberg game where the retailer is the leader, we observe that RFID technology provides a competitive advantage for the RFID enabled supplier. Further, we observe that high product substitutability, high demand uncertainty, low tag prices, and low restocking costs result in a more favorable environment for the RFID enabled supplier.

Keywords: shelf-space pricing and allocation, technologically different suppliers, radio frequency identificantion, vendor managed inventory

Suggested Citation

Szmerekovsky, Joseph G. and Tilson, Vera and Zhang, Jiang, Pricing and Allocation of Retail Space with One RFID Enabled Supplier and One Non-RFID Enabled Supplier (February 20, 2008). International Journal of Revenue Management, Vol. 3, No.1 pp. 37-55, 2009; Simon School Working Paper No. FR08-20. Available at SSRN: https://ssrn.com/abstract=1234063 or http://dx.doi.org/10.2139/ssrn.1234063

Joseph G. Szmerekovsky (Contact Author)

North Dakota State University - Department of Management, Marketing & Finance ( email )

Fargo, ND 58105
United States

Vera Tilson

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

Jiang Zhang

Adelphi University - School of Business ( email )

Garden City, NY 11530
United States

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