Chen, C. M., Chou, S. Y., Chang, I. H., and Tsai, Y. L. 2012. The Optimal Pricing, Promotion and Product Strategies of a Manufacturer in the Presence of Coupon Resale. NTU Management Review, 22 (2): 341-368. https://doi.org/10.6226/2012.(22-2).12
Chyi-Mei Chen, Associate Professor, Department of Finance, National Taiwan University
Shan-Yu Chou, Professor, Department and Graduate Institute of Business Administration, National Taiwan University
I-Hung Chang, MBA, Graduate Institute of Business Administration, National Taiwan University
Yi-Lin Tsai, Doctoral Student, Graduate Institute of Business Administration, National Taiwan University
Abstract
This paper analyzes the optimal coupon and product strategies in the presence of coupon resale markets for a monopolist facing high-valuation and low-valuation consumers. The results show that the effects of coupon resale on the firm's product and coupon strategies depend crucially on whether the highs and the lows have differential access to the coupon resale market. When they have equal access, coupon resale hurts the manufacturer by reducing the optimal coupon face value, and the higher the social value of coupon resale, the more the manufacturer gets hurt. In this case, coupon resale encourages the manufacturer to develop a high-end item. When it is more difficult for the highs than for the lows to access the coupon resale market, coupon resale may facilitate screening for the manufacturer by reducing the effective redemption cost of lows, and may encourage the latter to offer a low-end item.
Keywords
coupon resale product strategy game theory