Title:Price Coordination in Multi-Markets with Unauthorized Channels

Speaker： Dr.Zhongju(John)Zhang , Associate Professor of School of Business, University of Connecticut

Time: 10：30 -- 11：30 am. 15th Jun

Location: Room 217, Guanghua New Building

Abstract:

The sale of genuine branded products through unauthorized channels (also known as gray market) is a growing problem for many firms that operate in multiple markets. It is generally believed that the existence of such unauthorized sales will cannibalize the profits of brand owners. A number of approaches have been proposed to counter the gray market threat. In this paper, we develop a pricing model where a firm tacitly coordinates prices across different channels so as to maximize total profits. We demonstrate that while a firm needs to reduce the price gap between markets thus leaving little room for arbitrage, the firm can sometimes benefit from the emergence of gray market activities.