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doi: 10.3934/jimo.2021226
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## Pricing and quality decisions in a supply chain with consumers' privacy concern

 School of Management, Guangdong University of Technology, Guangzhou, Guangdong 510520, China

*Corresponding author: Rui Hou

Received  July 2021 Revised  November 2021 Early access January 2022

This study considers a supply chain consists of one manufacturer produces a product with a quality level and sells it through one retailer. A stylized model is developed to investigate the impacts of consumers' privacy concerns on pricing, quality decisions, and profitability through the relationship between product quality and personal information. When consumers' privacy concern is considered, the product quality level, the wholesale price, the payoffs of the manufacturer and retailer, and consumer surplus decrease with the personal information loss, whereas the selling price increases if this loss is low. Our results also show that the retailer prefers to charge a high selling price if the information benefit and the personal information loss are low, or the information benefit is relatively high. Moreover, a "win-win-win" outcome can be achieved among the manufacturer, retailer, and consumers if the personal information loss is sufficiently low. In the case of quality-differentiated products, however, although the manufacturer improves the product quality level, the wholesale prices are increased if the information benefit and the personal information loss are low, or the information benefit is high.

Citation: You Zhao, Zibin Cui, Jianxin Chen, Rui Hou. Pricing and quality decisions in a supply chain with consumers' privacy concern. Journal of Industrial and Management Optimization, doi: 10.3934/jimo.2021226
##### References:

show all references

##### References:
Under Armour HOVR Phantom
Supply chain structure
Impacts of consumers privacy concern on firms' payoff and consumer surplus
Firms' payoff and consumer surplus with general information benefit form
Under Armour HOVR Sonic shoes
Supply chain structure
Impacts of consumers privacy concern on firms' payoff and consumer surplus in a vertically-differentiated supply chain
Comparison among this paper and representative literatures
 Literatures multi Quality Privacy Supply chain products decision concern management [31] No Yes No No [40, 36] No Yes No Yes [20, 6, 22] No No Yes No [7] No Yes Yes No [43] Yes Yes No No This paper Yes Yes Yes yes
 Literatures multi Quality Privacy Supply chain products decision concern management [31] No Yes No No [40, 36] No Yes No Yes [20, 6, 22] No No Yes No [7] No Yes Yes No [43] Yes Yes No No This paper Yes Yes Yes yes
Notations
 Super(sub)scripts Explanation S consumers share personal information N consumers not share personal information H high-quality product L low-quality product Parameters Explanation $\theta$ willingness to pay for product quality, $\theta \sim U[0,1]$ $b$ information benefit coefficient from product quality, $b \in (0,1)$ $c$ consumers' personal information loss, $c > 0$ $X$ binary decision parameter for consumers's data sharing, $X=0,1$ Decision Variables Explanation $p$ product's selling price $q$ product's quality level $w$ product's wholesale price $\pi_{M}$ payoff of the manufacturer $\pi_{R}$ payoff of the retailer $CS$ consumer surplus
 Super(sub)scripts Explanation S consumers share personal information N consumers not share personal information H high-quality product L low-quality product Parameters Explanation $\theta$ willingness to pay for product quality, $\theta \sim U[0,1]$ $b$ information benefit coefficient from product quality, $b \in (0,1)$ $c$ consumers' personal information loss, $c > 0$ $X$ binary decision parameter for consumers's data sharing, $X=0,1$ Decision Variables Explanation $p$ product's selling price $q$ product's quality level $w$ product's wholesale price $\pi_{M}$ payoff of the manufacturer $\pi_{R}$ payoff of the retailer $CS$ consumer surplus
The improvement of our work
 Our work [7] Utility function $U_{i}=\theta q_{i}-p_{i}+(b q_{i}^{k}-c)X$, $i=H,L$ $U=\theta q-p+b q^{k}X$ Retailer's objective function $\pi_{R,i}^{N}=(p_{i}-w_{i})D_{i}^{N}$, $i=H,L$ $\pi_{R}=\int_{0}^{\bar{\theta}}P(\theta)d\theta+\int_{\bar{\theta}}^{1}P d\theta+\int_{\overline{\theta}}^{1}Pd\theta-C(q)$ Manufacturer's objective function $\pi_{M,i}^{N}=(w_{i}-q_{i}^2)D_{i}^{N}$, $i=H,L$ None
 Our work [7] Utility function $U_{i}=\theta q_{i}-p_{i}+(b q_{i}^{k}-c)X$, $i=H,L$ $U=\theta q-p+b q^{k}X$ Retailer's objective function $\pi_{R,i}^{N}=(p_{i}-w_{i})D_{i}^{N}$, $i=H,L$ $\pi_{R}=\int_{0}^{\bar{\theta}}P(\theta)d\theta+\int_{\bar{\theta}}^{1}P d\theta+\int_{\overline{\theta}}^{1}Pd\theta-C(q)$ Manufacturer's objective function $\pi_{M,i}^{N}=(w_{i}-q_{i}^2)D_{i}^{N}$, $i=H,L$ None
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