Based On Switching Costs Two Channels Dynamic Pricing For Research

With the rapid development of internet, the cyberspace has become increasingly complex, and Internet distribution channel is joining, makes the traditional channels face unprecedented pressures. Price as the competition concerns between the traditional channel and Internet channel, many scholars have conducted many studies, but research considering different channel preferences from consumers is few in theoretical modeling. In addition, switching cost is the core concept in pricing studies, but switching cost between channels is rarely studied. This study expands on the basis of such theoretical foundation.In this paper, we use the theory modeling approach with game theory-based. We use the Hotelling model to research the companies' pricing problem under the Internet environment and discuss the price competition' relationship between the traditional channel and Internet channel, through the two-stage dynamic game, we obtain the two stores' optimal pricing and optimal profit. Moreover, this paper joins the research about switching cost and price discrimination, and both two are far-reaching implications to companies' pricing. This paper constructs the two channels, and hopes to give some theoretical directions to distributors.In this paper, we draw some interesting conclusions based on the model, and use backward induction method in two-stage competition model, discuss the influence by the switching cost in the second period: when the market exists customer switching costs, switching costs and discount of two stores is larger than that when there isn't switching costs. The equilibrium price is monotonically increasing by the switching costs.Then, this paper discuss the equilibrium price be influenced by the switching costs in the second period: From a market share perspective, the greater the switching costs, Market share is more valuable for the stores; from the discount factor perspective, When the store is rational, Whether to consider switching costs or not, pricing will be lower than the non-rational time, and will be lowest when consider the switching costs, if difference in switching costs between two channels is significantly lager than difference in channel preferences, They will be able to develop high-value strategy.Finally, we discuss these conclusions detailedly, point out the managerial implications, then put forward the deficiencies of this study and future research prospects.