We investigate two very common pricing schemes for a Stackelberg-dominant retailer: percentage-markup and dollar-markup. We show that when a dominant retailer switches from dollar to percentage markup, the channel’s “overall pie” and the retailer’s “pie-piece” are both enlarged. In...

A manufacturer supplies a newsvendor product to a dominant retailer, who does not know the manufacturer's unit production cost k. The expected retail demand is a function of the unit retail price p. For this increasingly prevalent but rarely analyzed scenario, we compare the performance of...