Product Pricing Model in Industrial Clusters Using Game Theory Approach ((Case Study: Stone Cluster in Tehran))

Document Type : Research Paper

Authors

1 Ph.D. Candidate, Industrial Management, Tarbiat Modares University, Tehran, Iran

2 Assistant Prof., Faculty of Management, University of Alzahra, Tehran, Iran

Abstract

In today's competitive world, maintaining competitive power of industries is the requirement of remaining in the competition. In the case of small industries, it also needs to think about strategies of making the industries more competitive in order to survive and have successful activity in competition. In many countries, one of the methods that have gained successful experience in increasing competitive power of SMEs is clustering these firms in a frame of “industrial clusters”. Considering the importance of industrial clusters’ role in regional economic development programs, providing the solutions of improving the performance of the clusters was always a concern for researchers and specialists of this field.
In this study, the process of product pricing as one of the most important factors which affects the profitability of industrial clusters is discussed by game theory approach. The proposed model focuses on the structural differences between supply chains and industrial clusters where the concept of Stackelberg game and bilevel programming model is used to determine the price of cluster’s products. In order to test the validity of the proposed model, the stone cluster data of Tehran are collected and using MATLAB software they are implemented in propose pricing game. Then, the results of the Stackelberg game between leader and cluster’s Stakeholders is been analysed.

Keywords


Abdoli, Gh., (2014). Game Theory and its Apllications: Static and Dynamic Games of Compelete Information, University of Tehran. (in Persian)
AmoozadMahdiraji, H. (2013). Coordination of InventoPricing and Marketing Expenditure Decisions Three Level Supply Chain-Game Theoretic Approachry, PHD Thesis, Faculty of Management, Tehran University.
(in Persian)
Aust, G., Buscher, U. (2012). Vertical cooperative advertising and pricing decisions in a manufacturer–retailer supply chain: A game-theoretic approach, European Journal of Operational Research, 223, 473-482.
Azari Khojaste, M. (2013). Price competition between two supply chains under various supply chain’s network structures using a game theoretic approach, PHD Thesis, Faculty of Industrial Engineering, Tarbiat Modares University, Tehran, (in Persian)
Cai, G., Zhang, Z.G., Zhang, M., (2009), Game theoretical perspectives on dual-channel supply chain compe tition with price disc ounts and pricing schemes, International journal of Production Economics, 117, 80–96.
Cooke, P., (2002b), Biotechnology clusters as regional, sectoral innovation systems, International Regional Science Review, 25(1), 8-37.
Giri, B.C., Sharma, S., (2014), Manufacturer’s pricing strategy in a two-level supply chain with competing retailers and advertising cost dependent demand, Economic Modelling, 38, 102-111.
Gorgin, E. (2009) linear bi-level programming With the functions on multiple sequence, Master Thesis, Faculty of Industrial Engineering, Alzahra University. (in Persian)
Holloway CA. (1979) Decision making under uncertainty. In: Models and choices, Englewood Cliffs, NJ Prentice-Hall. 401–402.
Huang, Y., Huang, G.Q., Newman, S.T., (2011), Coordinating pricing and inventory decisions in a multi-level supply chain: A game-theoretic approach, Transportation Research Part E, 47, 115–129.
Iranlo, M., Moarefi, A., Ashtiani, V., Soleimani, Gh. (2013) Manage the development of industrial clusters, Mehr Sajad Publisher. (in Persian)
Jannatifar, H. (2012) Investigation about effective factor By Creation and Development of industrial cluster in Esfahan Province and Prioritize these factors under A.N.P method, Master Thesis, Faculty of Management, Islamic Azad University. (in Persian)
Lee, W.J., Kim, D., (1993) Optimal and heuristic decision strategies for integrated product and marketing planning. Decision Science. 24 (6), 1203–1214.
Li, M., Jiang, X. (2012), Co-Opetition Pricing Game of Industrial Clusters based on Incomplete Information Cournot Model, International Journal of Advancements in Computing Technology, 4(18), 424-432.
Nobari, A. (2012). Pricing in the Component Relations of a Closed-Loop Supply Chain by Using Game Theory Concept, Master Thesis, Industrial Engineering Faculty, K.N. Toosi University of Technology. (in Persian)
Parakash, P. (2012) Enterprise and industrial risk management, Virginia Commonwealth University, Chapter 3, 91-136.
Pedro C. O., Hélcio M. T., & Márcio L. P. (2011). Relationships, cooperation and development in a Brazilian industrial cluster. International Journal of Productivity and Performance Management, 60(2), 115-131.
Seifbarghy, M., Nouhi, Kh., Mahmoudi, A., (2015) Contract design in a supply chain considering price and quality dependent demand with customer segmentation, International Journal of Production Economics, 167, 108-118.
SeyedEsfahani, M.M, Biazaran, M., Gharakhani, M., (2011). A game Theoretic approach to coordinate pricing and vertical co-op advertising
in manufacturer–retailer supply chains, European Journal of Operational Research, 211, 263–273.
Soleimani, Gh., Azizmohammadlo, H., Vahdat, S. (2014) Business Clusters Development in Iran: Achievements and Practical Experiments, Ainmahmoud Publisher. (in Persian)
Souri, A. (2013), Game Theory andEconomic Applications, Department of Economic Sience, second edition. (in Persian)
Stimson, R.J., Stough, R.R., Roberts, B.H. (2006). Regional Economic Development: Analysis and Planning Strategy. 2nd Edition, Springer, Berlin, Chapter 2: The Regional Economic Development Movement: The Evolution of Strategy from Early to Contemporary Approaches, 53-104.

United Nations Industrial Development Organisation, (2014) UNIDO annual report, United Nations Office at Vienna.

Valizade, M. (2008) Knowledge management and the development of industrial clusters, Tadbir Journal, No. 186. (in Persian)
Yue, D., You, F., (2014), Game-Theoretic modeling and optimization of multi-echelon supply chain design and operation under Stacklberg game and market equilibrium, Computers and Chemical Engineering, 71, 347-361.
Zandi, M. (2015) Effective Factors in Sub-Quality Construction Stone, 16th Stone YellowBook, Roshan Rooz Advertising Company. (in Persian)
Zhao, J., Liu, W., Wei, J., (2013), Competition under manufacturer service and price in fuzzy environments, Knowledge Based System. 50, 121–133.
Zhao, J., Wang, L., (2015), Pricing and retail service decisions in fuzzy uncertainty environments, Applied Mathematics and Computation, 250, 580-592.
Zhou, C. Zhao, R. Tang, W., (2008), Two-echlon supply chain games in a fuzzy environment, Computer and Industrial Engineering. 55 (2), 390–405.