Study On The Quantity Competition Strategy Of Oligopoly Based On Consumer Inventory

In many storable-goods markets, frms are often aware that consumers may strategicallyadjust purchase behavior in response to the current price and expected price dynamics. When theprice a consumer encountered in the store is low enough, the consumer may not only buy thegood for present consumption but also store it for future consumption, then the consumerstockpiling is built. Consumer inventory affects the demand in future periods and intensifies theuncertainty of production and sales demand forecast uncertainty for enterprises, which has posednew challenge to the enterprises ’ traditional production strategy. In order to improve traditionalcompetitive strategy, this paper study the quantity competition strategy of oligopoly based onconsumer inventory.The main study contents are as follows: firstly, the paper begins with the consumerinventory behavior pattern and then analyzes the main influence factors of forming consumerstockpiling from four aspects, such as price, consumer characteristics, social environment andthe commodity attributes. Secondly, system dynamics method is proposed to describe theconnection of some key factors based on those results and then the formation model of consumerinventory is established preliminarily Thirdly, the paper analyzes the advantages anddisadvantages of consumer inventory and investigates the value of consumer inventory from theconsumer and enterprise perspective, respectively based on the analysis of advantages anddisadvantages of consumer inventory, which indirectly reflects the main influence of consumerinventory on demand forecasting. Finally, focusing on applying the principles of game theory,the paper introduces consumer inventory as an explanatory variable into the Cournot model andproposes the oligopoly quantity competition model based on consumer inventory by analyzingthe non-cooperative game between competitive firms, then discusses the influence of pureinventory behavior and consumption effect inventory behavior on the enterprise productionstrategy and a numerical study is also provided to validate it.The result shows that in addition to the price, the factors leading to form consumerinventory also include inventory cost, commodity attributes, price sensitivity, social environmentand so on. Moreover, in the process of non-cooperative game, the competitive behavior ofoligopoly firms eventually obtains a production equilibrium outcome when the consumerinventory cost is low enough and the equilibrium profit is reduced.